In this article, we discuss the 10 largest economies in Europe. If you want to read about some more largest economies in Europe, go directly to 5 Largest Economies in Europe.
Europe is among the most important contributors to the global economy, representing the key grounds for employment, competitiveness, and growth worldwide. Socioeconomic changes in recent years have presented many new opportunities for international investors as well as skilled and talented individuals from around the globe. At the same time, the current investment appeal of Europe may be put to the test by the changing geopolitical and economic climate, which is largely the result of the conflict in Ukraine. However, the continent remains home to some of the most powerful and prosperous nations on the planet.
According to the most recent annual EY European Attractiveness Survey, Europe’s attractiveness for FDI has begun to improve following the COVID-19 epidemic, with a 5% rise in the number of projects launched in 2021 compared to 2020. Despite several challenges, the long-term appeal of Europe is strong, with 64% of investor respondents seeing an increase in that appeal over the following three years. The top FDI markets are France, Germany, and the UK, whose economic prospects and growth sectors have changed dramatically.
A major challenge for European economies today is the shrinkage of the working population. The proportion of individuals in the EU who are of working age is decreasing due to demographic change, while the proportional number of retirees is increasing. In the ensuing decades, it is expected that an increasing percentage of the population would be elderly. This might therefore result in an additional strain being placed on those who are still in the labor force to pay for the social expenditures made necessary by the ageing population for a variety of associated services.
The Organization for Economic Cooperation and Development (OECD) predicts that by 2050, the percentage of people in wealthy EU nations who are over 80 would double. As the population ages, they are more likely to experience long-term physical and mental health issues, which increases their need for medical and social services. However, if fewer people are employed, there may be more open positions and less tax money to support public programs like healthcare and pensions. Even though Europe is one of the most developed regions in the world, some countries in Europe still lag behind in terms of social development.
Furthermore, it has been found that a great number of people are quitting their jobs or switching to another industry. Researchers term this the Great Attrition. In the EU, there are unfavorable business circumstances brought on by the destabilizing war in Ukraine, increasing prices, and mounting concerns about hiring freezes and job losses. One-third of respondents, according to research by McKinsey published in December 2022 and based on a poll of more than 16,000 people in nine European nations, indicate that they want to leave their employment in the upcoming three to six months.
To counter the aforementioned problems, economies in the EU are striving to attract more foreign investment to ramp up their numbers. As reported by the IMF in December 2022, inward FDI positions increased by an average of 7.1 percent in national currencies for the 112 economies that provided data. Due to the recent rise of the dollar, this worldwide growth statistic equates to only 2.3 percent in dollars.
A Communication to the European Commission, outlining the policy and legal measures on “Attracting Skills and Talent to the EU”, was released on April 27, 2022. The Communication suggests a pillar that aims to simplify the immigration process and give immigrants more rights. It advocates for making it simpler to satisfy the residency requirement for nationals from developing countries to get EU long-term resident status by taking into account the total accumulated residence times in the different Member States in order to increase the EU’s attractiveness to talent.
The Communication also suggests creating an “EU Talent Pool”, a platform that would connect companies and qualified workers throughout the EU. For EU firms to be able to mobilize talent and simplify skill matching, the Talent Pool would map and document the talents of interested applicants (possible migrants) from non-EU nations. This project is highly ambitious, especially if it intends to serve as a platform for the entire EU. Furthermore, it is unclear how it would actually contribute given the availability of job search engines.
Our Methodology
The countries listed in the article are attracting both capital as well as talented individuals who are contributing to the growth of their economies. Hence, the stocks of these countries may be a good long-term investment. For each of these countries, the 5-year GDP growth rate as well as top companies in each country are mentioned as well.
Photo by Jacek Dylag on Unsplash
Largest Economies in Europe
10. Finland
5Y avg GDP (2017-2021): $274.2 billion
5Y avg GDP growth rate (2017-2021): 1.34%
In order to draw in more foreign professionals, Finland is taking steps to make it easier for highly qualified employees, budding businesses, students, and researchers to enter the country.
On June 1, a new fast-track procedure and a new long-term national D visa were announced as the most recent of these steps. The processing period for online applications for residence permits under this fast-track process, which is targeted at highly qualified professionals, start-up entrepreneurs, and their families, is promised to be 14 days.
Also, the govt of Finland introduced a 90-Day Finn program for Professionals from all around the world with a forward-thinking perspective to come together. This exceptional chance is intended to advance their professional network in Helsinki and assist them in expanding their businesses. 90-Day Fin program allows a foreign individual to be supported by a local knowledgeable team of business consultants as they help the foreigners to succeed in Finland.
In IMD World Talent Ranking, Finland rose from eighth place to sixth place recently, placed 11th in Investment & Development, 11th in Appeal, and fourth in the Readiness factor. Its greater performance in indices such as worker motivation is primarily responsible for its overall development (fourth, up from 10th),
In comparison to the previous quarter, when it climbed by $373.4 million, Finland’s FDI increased by $291.5 million in November 2022. Nordea Bank remains the largest company with a market cap of $42.63 billion, followed by Neste with a market cap value of $38.04 billion.
9. Denmark
5Y avg GDP (2017-2021): $357.8 billion
5Y avg GDP growth rate (2017-2021): 1.9%
The listings of occupations for which there is a labor shortage in Denmark have been updated. The Positive List for Highly Educated and the Positive List for Skilled Employees are two lists that act as a “map” for international workers who want to relocate to Denmark to find a job. The occupations on The Positive List are those where there is a scarcity of skilled workers in Denmark.
Denmark’s is placed fifth in IMD World Talent Ranking. It comes in second in Investment & Development and eighth in Readiness, but at 17th in Appeal, its performance is noticeably less impressive. It is given top priority when it comes to senior management availability, staff engagement, talent acquisition and retention, brain drain, and employee training.
In September 2022, Denmark’s Foreign Direct Investment (FDI) increased by 6.5% of the nation’s nominal GDP, up from 3.9% the previous quarter. As of April 2022, the digital mailbox supplier E-Boks A/S has the largest turnover among Danish businesses, bringing in over 231 billion Danish kroner, which make roughly $33.8 billion. Glunz & Jensen Holding A/S, a prepress firm, came in second with a revenue of almost 196 billion kroner which is equal to $28.64 billion.
8. Norway
5Y avg GDP (2017-2021): $416.99 billion
5Y avg GDP growth rate (2017-2021): 1.5%
In IMD World Talent Ranking, with rankings of fifth in Investment & Development, ninth in Appeal, and fourteenth in Readiness, Norway maintains its fourth-place overall finish. It is first in terms of the availability of skilled workers, second in terms of the availability of financial skills, fourth in terms of the effects of brain drain, and fifth in terms of both the total public expenditure on education per student and the student-teacher ratio at the indicator level (primary education).
Norway saw a rise in FDI of 4.3 USD billion in September 2022 as opposed to 8.8 USD billion in the previous quarter. As of December 2022, Visolit AS was the dominant business in Norway’s information services sector, with a net profit of almost 1.9 billion Norwegian kroner or $192 million. With a net profit of more than 727 million Norwegian kroner or $73.5 million, Finn No AS came in second.
7. Sweden
5Y avg GDP (2017-2021): $559.9 billion
5Y avg GDP growth rate (2017-2021): 1.7%
Since the beginning of 2022, Sweden has recorded over 29,000 applications for first-time work permits. This shows that Sweden is already a desirable destination for employees. New labor migration regulations have been in effect in Sweden since June 1, 2022.
These regulations include the introduction of the need for a work contract and the demand that businesses disclose any changes to the conditions of employment. The government may also demand the employer to report on the working conditions and to do so if the circumstances of the employment contract have changed for the worse under the new regulations. Employers that refuse to provide the information requested by the government on the working conditions may be fined. Other than that, family migration connected to foreign labor maintenance requirements is implemented and employers are discouraged to expel people for minor errors.
Sweden maintains its second-place position by ranking well in Appeal (second), Readiness (sixth), and Investment & Development (second), but less so in the other categories. It achieves its greatest ranking at the criterion level, coming in second in both the exposure to particle pollution and the effect of brain drain.
Sweden saw a rise in Foreign Direct Investment (FDI) of 3.7 USD billion in September 2022 as opposed to 16.8 USD billion in the previous quarter. As of November 15, 2022, Investor AB (market cap of $57.1 billion) was Sweden’s top corporation by market capitalization. Atlas Copco was the company with the second-largest market cap at the time, coming in behind Investor AB with a market valuation of around 54.8 billion dollars.
6. Switzerland
5Y avg GDP (2017-2021): $747.4 billion
5Y avg GDP growth rate (2017-2021): 1.4%
The Federal Council, the executive body of the federal government in Switzerland, approved a set of measures in March 2022 to make it easier to hire qualified workers from non-EU nations. This action is important in the effort to make the administrative procedure simpler for employers and to boost the economy. Based on these new regulations, employers may not need to conduct labor market tests in the areas where there is a confirmed shortage of skilled labor. Additionally, the academic background check was also waved off in sectors with low-skilled labor. However, the applicants must prove previous work experience in the same sector. Furthermore, higher education degree holders such as masters or doctorates will be allowed to stay and work in the country irrespective of their country of origin.
Both of these initiatives might benefit the Swiss economy by encouraging young people to stay in the country after finishing their studies and by making it easier for firms to hire non-EU citizens for unfilled positions.
In the IMD World Talent Ranking, Switzerland ranked first in Readiness, second in Appeal, and first in Investment & Development. There are positives across the board at the indication level. It leads the way in the efficient execution of apprenticeship programs, the recruitment of highly trained foreign workers, and the accessibility of managers with worldwide experience and financial know-how. In terms of the private sector’s emphasis on employee training, the workforce’s degree of motivation, and the accessibility of language skills, it comes in second.
Switzerland saw a rise in Foreign Direct Investment (FDI) of $6.6 billion in September 2022 as opposed to $7.3 billion in the previous quarter.
By market capitalization, Nestlé was the biggest corporation in Switzerland as of November 15, 2022, with a market valuation of over $319 billion. Roche and Novartis, two pharmaceutical firms, came next, with market capitalizations of $273.8 and $179.5 billion, respectively.
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Disclosure. None. 10 Largest Economies in Europe is originally published on Insider Monkey.