Manufacturing has long been the backbone of the European economy. From the industrial revolution in the 18th century to the reconstruction of the continent after World War II, and later to the formation of the European Union’s single market, the industrial sector has been the anchor of Europe’s prosperity. However, the trajectory of this sector has been neither linear nor without turbulence. To understand why the rebound in 2025 matters, it is necessary to revisit the long arc of decline, adaptation, and resilience that characterized European manufacturing from the early 2000s through the crises of the 2020s.

Several scholars have emphasized the structural importance of manufacturing in sustaining productivity, innovation, and export capacity. Dani Rodrik (2004) famously argued that manufacturing industries often display “escalator” properties—once countries enter them, productivity growth accelerates due to spillovers and scale effects. Similarly, Barry Eichengreen (2011) reminded us in Exorbitant Privilege that manufacturing underpins a nation’s ability to run persistent external balances, as it provides tradable goods essential for financing deficits. Europe’s experience has been a constant struggle to maintain this escalator effect amid globalization, digitalization, and geopolitical shocks.