US corporates take advantage of European disharmony
Europe’s corporates are lagging behind their US counterparts when it comes to competing in the global marketplace due to a lack of political and economic co-operation, according to a report issued by KPMG.
Stalled political negotiations for the creation of a pan-European market are hindering the efforts of Europe’s corporates while the industrial infrastructure is also proving a barrier to growth.
Recent wrangling over the EU Takeover Directive is proving equally inhibitive to Europe’s corporates, typified by a fall-off in the rate of M&A activity due to failed reform of the cross-border takeover rules.
“Europe is being held back by its industrial structure and we are not yet seeing the promised benefits of a single market,” warned Andrew Smith, chief economist at KPMG’s UK base. “Despite the free movement of goods and introduction of the euro, barriers to the integration of the labour and capital markets mean that corporate businesses are not growing at a rate needed to compete with their US counterparts globally.”
The figures for M&A over the past 20 years tell the story. European corporates buying outside Europe account for over a quarter of all M&A activity: the US equivalent is a mere 8%, suggesting that US corporates face fewer barriers when acquiring in the American marketplace.