European Central Bank blog estimates a lasting 10% rise in electricity prices could cut employment in energy-intensive manufacturing by up to 2%

The European Central Bank published an ECB Blog analysis on how persistently high energy prices could affect euro area employment, concluding that sustained increases in electricity costs would likely reduce jobs in energy-intensive manufacturing and have broader knock-on effects in local economies. Using financial statement data for roughly 200,000 manufacturing firms in Belgium, France, Germany, Italy, the Netherlands and the United Kingdom, the authors estimate that a permanent 10% rise in electricity prices could lower employment in the most energy-intensive industries by 1% to 2%. The impact is expected to be geographically concentrated in regions with clusters of energy-intensive activity, including southern Germany, the Ruhr and northern Italy, and to a lesser extent northern Belgium. The post-2022 environment is framed as one of still-elevated industrial electricity prices, with levels that once were around EUR 75/MWh now exceeding EUR 100/MWh and in some countries topping EUR 190/MWh, while EU electricity prices are described as about 2.5 times those in the United States and gas prices nearly five times higher; the analysis also highlights that job losses can propagate locally, citing evidence that the loss of one high-tech, energy-intensive manufacturing job can be associated with up to five additional jobs lost elsewhere in local services. As potential mitigants, the blog points to faster availability of cheaper and cleaner energy, alongside labour market flexibility and support mechanisms to upskill and retrain workers and facilitate mobility, aligning with approaches referenced in the European Commission’s Clean Industrial Deal.