Europe's industrial heartland put to the test by the war in Ukraine
The war in Ukraine is causing great suffering for all those involved in the conflict and considerable economic consequences for European countries and regions. An analysis by BAK Economics regarding the structural impact on European regions shows a clear East-West divide: the regions of the Eastern European countries - Poland, the Czech Republic and Hungary - are the most affected, followed by the main industrial locations in Western Europe. By contrast, most Swiss regions are below the European average. Production sites in Eastern Europe are particularly exposed not only because of their geographical proximity to the center of war, but also because of their high industrial density, their close integration into global value chains and their high energy intensity. This makes these regional economies particularly vulnerable to the economic consequences of conflict. For similar reasons, albeit to a lesser extent, the industrial heartland of Western Europe is also being tested. The war also highlights the need to accelerate the structural change towards a greener economy and to strengthen supply chains in order to make them more crisis resistant.