Production Down, Imports Up, Competitiveness at Risk
A challenging macro-economic context for European manufacturing
In 2024, the European economy expanded at a moderate pace, with GDP growth reaching 1% (up from 0.5% the previous year). Despite some improvements in market conditions, the overall manufacturing sector remained weak, with performance varying across industrial sub-sectors. One of the most worrying signals was the drop in industrial capacity utilisation below 80% by end-2024, returning to levels last seen in late 2020.
For many manufacturing industries, the pressure has been amplified by energy prices that remain high compared to major global competitors, alongside geopolitical uncertainty, trade tensions, and a difficult investment environment.
Textile and clothing performance in 2024: declines across the value chain
Against this background, the EU textile and clothing (T&C) sector posted poor economic performance throughout 2024. The industry experienced a clear deterioration in business activity across the value chain:
- Production, turnover and employment recorded negative growth.
- Exports did not support growth, reflecting weaker global demand and persistent competitiveness challenges for EU exporters.
- Imports from non-EU countries increased, worsening the EU trade balance and intensifying competitive pressure within the Single Market.
As highlighted in the Autumn Report, these trends undermine Europe’s stated ambition to strengthen industrial resilience: instead of re-industrialising, Europe risks de-industrialising its textile and clothing base.
First half of 2025: further deterioration in key indicators
In the first half of 2025, both textile and clothing industries saw further declines in production, turnover, exports and employment. The sector continues to face consistent headwinds, notably:
- Weaker consumer demand
- Increased competition from low-cost imports, including via online channels
- Lower values shipped worldwide, reflecting soft international demand and heightened competitive pressure
- A more unpredictable economic environment, driven by ongoing conflicts and major transitions
Turnover remained negative in both sectors, with clothing showing a sharper decline—suggesting stronger pressure on sales volumes and/or pricing in downstream markets.
Trade balance: rising imports, falling exports
The trade position deteriorated further in both textiles and clothing, driven mainly by rising imports. This shift may also point to changing sourcing strategies and demand patterns, favouring imported finished goods.
At the same time, exports fell in both sectors, with a steeper decline for textiles. The year-on-year drop in trade values and volumes reflects both weaker global demand and strong competition from other regions—further limiting the sector’s ability to grow through international markets.
What’s driving the “perfect storm” for EU T&C competitiveness?
The Autumn Report describes a “perfect storm” created by multiple, reinforcing pressures. In the fashion segment, the rapid growth of online platforms offering low-value products without effective compliance controls is reported to have a particularly damaging impact on EU garment manufacturers.
More broadly, the sector faces:
- High energy bills, despite repeated political commitments to reduce energy costs
- Regulatory uncertainty (what legislation applies, when, and how consistently)
- The need for major investment to deliver the digital transition
- Trade diversion and distortions, including increased pressure from Asian products and concerns about pricing below raw material cost in certain inputs (e.g., polyester), raising questions about whether “free but fair trade” is being respected
Crucially, the report also points to a structural market failure: companies investing in sustainability and compliance are not consistently rewarded by the market, while those externalising environmental costs can gain a price advantage. Addressing this imbalance is essential to restore fair competition and accelerate the transition.
Not all segments are down: pockets of resilience and innovation
Despite the difficult outlook, there are areas of strength. The Autumn Report notes good growth in defence and medical textiles, alongside momentum in textile recycling (with start-ups partnering with European brands to scale capacity). Innovation continues across multiple areas, including:
- Bio-based fibres
- Improved water efficiency
- Reduced CO₂ emissions
- Alternative chemicals
These developments show that the sector has the capability to deliver the transition—if market and regulatory conditions support investment and scale-up.
What’s needed: a framework that rewards compliance, innovation and EU production
To reverse the current trajectory, the priority is a policy and market framework that:
- ensures a level playing field (including effective enforcement and fair competition in online and offline markets)
- rewards sustainable and compliant production rather than disadvantaging it
- stimulates innovation and entrepreneurship to scale solutions in recycling, materials and industrial efficiency
To get your copy of the Autumn Report, please contact Roberta Adinolfi : roberta.adinolfi [at] euratex.eu