Which industry will lead European economic growth over the next decade?…
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Mark Callender, Head of Property Research
While it would be wrong to write off European financial services as a sunset industry, it seems unlikely that the sector will soon see a repeat of the strong growth which it enjoyed between the mid-1980s and 2007. Many European banks are still saddled with non-performing loans as a result of poor lending in the mid-2000s and the increase in capital reserves required by the forthcoming Basel III regulations is likely to permanently reduce their profitability. Investment banking has been hit particularly hard and the Centre for Economics and Business Research estimates that financial services employment in London is now back to its 1993 level.
So if financial services are no longer the force they were, which industry will lead European economic growth over the next decade? One possible candidate is the technology, media and telecoms sector (TMT) which includes a wide range of mainly digital activities including computer programming, data storage, film, games, music, IT consultancy, publishing, telecoms, television and website design and maintenance. Oxford Economics forecasts that Europe’s TMT sector will grow on average by 2.6% per year over the next four years to end 2016, faster than any other industry and double the pace of total GDP (1.3% per year).
Source: ETFWorld – Schroders
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