It is hardly news that after decades of deregulation and global economic integration, we have started to purposefully march in the opposite direction. There are warnings of peak globalisation sprinkled with financial crisis, the breakdown of supply-chains and wars on our doorstep.

Practically speaking, this means foreign direct investment decisions have become immeasurably more complicated, and companies must deal with unprecedented levels of change and uncertainty. Phenomena driven by geopolitics, sanctions following Russia’s invasion of Ukraine, the cost-of-living crisis with its resulting wage demands, and persisting demand- and supply-side shocks initially emerging in the wake of Covid-19, but still bedevilling the system.

Adding insult to injury, European regulators seem to be going on a rampage at this very point in time. New reforms such as the European Corporate Sustainability Due Diligence Directive, the Corporate Sustainability Reporting Directive, the European Sustainability Reporting Standards and the British Environment Act, to name but a few, all add to the regulatory burden of companies that are already chafing under the strain of epochal change. In the context of geopolitical tensions and a heightened sense of national security, European institutions rarely manage to agree on anything practically useful; all the while the Brits have stumbled out into the wilderness on their own.

To borrow from Winston Churchill’s famous dictum that “you can always count on the Americans to do the right thing after they have exhausted all other possibilities”, Europe finally seems to be getting to grips with the new realities. With escalating US–Chinese tensions, reshoring back to Europe is becoming a very real option. At the same time, the ‘grown-ups in the room’ in Germany seem to be putting an end to the Green party’s ideological overdrive, while Poland is stepping back from the nationalistic brink. Only the French continue to pursue their favourite past-time: semi-violent strikes.

In a world of policy-driven fragmentation, being part of a large, rules-based and functioning single market of consumers with a high level of per capita income, isn’t the worst position to be in. 2024 is probably going to be a rough ride, so riding it out in Europe seems to be a good idea.

Martin Kaspar is head of business development at a German Mittelstand company in the automotive industry. E-mail: martin.georg.kaspar@googlemail.com

This article first appeared in the December 2023/January 2024 print edition of fDi Intelligence

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