One industry that is likely to remain at the center of global trade battles is electric vehicles. More than 10 million were made in China last year, and this dominance led the US, Canada and the European Union (EU) to introduce tariffs on them.
Beijing says they are unfair and is challenging them at the World Trade Organization.
However, the prospect of tariffs by Donald Trump is causing concern in the EU.
“Trade restrictions, protectionist measures are not conducive to growth and ultimately have an impact on inflation, which is largely uncertain,” European Central Bank President Christine Lagarde said last month. “(But) in the short term, it’s probably pure inflation.”
Germany and France are the traditional engines of economic growth in Europe. But theirs low productivity amid political instability last year means that despite a recent pick-up in growth, the eurozone risks losing momentum next year.
That is, unless consumers spend more and businesses don’t increase their investments.
In the UK, higher prices may also come as a result of higher taxes and wages, according to one survey.
One obstacle to lower interest rates in the eurozone is that inflation remains at 4.2%. This is more than double the target of 2%, and strong pressure on wages has been a barrier to further reductions.
According to Sander van ‘t Noordende, CEO of Randstad, the world’s largest staffing firm, something similar happened in the US.
“In the US, for example, (wage inflation) will still be around 4% in 2024. In some countries of Western Europe it is even higher.
“I think there are two factors. There’s a lack of talent, but also, of course, inflation and people demanding to be paid more for the work they do.”
Mr van ‘t Noordende adds that many companies are passing these additional costs on to their customers, adding to the upward pressure on overall inflation.
He says the slowdown in the global labor market reflects a lack of “dynamism” in companies, and economic growth is the key to reversing this.
“When the economy is doing well, businesses are growing, they start hiring people. People see exciting opportunities, and you just start seeing people moving.”
