Today’s PMIs for the Eurozone were a mixed bag. The positives (the improvement in services for France) were counterbalanced by signs of persistent weakness in Germany. These surveys reflect in part the ongoing fallout from China’s slowdown, Brexit and Turkey’s recession.
However, it is important not to lose sight of some of the encouraging, longer term trends that suggest the Eurozone economy will recover. The strong growth in Fintech has been a major plus for Europe. Public listings or acquisitions have generated an impressive €83bn between 2013 and 2019 for early investors in fintech start-ups.
It is worth stressing that the UK and Israel are included within ‘Europe’. The UK attracted the most VC funding in Q3 (€2.6bn), while Germany was second (€2.0bn).
Europe still lags the US and Asia for VC funding, but the direction of travel is important. The success of Europe’s Fintech start-ups will act as a catalyst for other sectors that have, until now, lagged.
The jump in VC funding for Germany has come against a difficult backdrop. Nevertheless, there are reasons to be optimistic. The 25 top scale-ups in the 2019 EIT Digital Challenge included 8 small businesses from Germany – two in digital tech, two in ‘digital cities’, one in digital industry and three in ‘digital wellbeing’.
This is actually less than 2018, when Germany had twelve entries. But this merely shows that Germany has not been lagging behind in the tech race. It simply had a bigger exposure to the external shocks which caused the global economy to slow in 2019.
