In this article, we discuss the 5 largest economies in Europe. If you want to read about some more largest economies in Europe, go directly to 10 Largest Economies in Europe.
5. Netherlands
5Y avg GDP (2017-2021): $917.996 billion
5Y avg GDP growth rate (2017-2021): 1.7%
High-skilled immigrants who do not need a long-term visa (MVV) may now begin working in the Netherlands even if their residence permit is not yet available. This was announced by Dutch Immigration and Naturalization Service (IND) in August 2022. This new rule, though very short term, has allowed a new wave of skilled labor force to move into the country. It was enforced from June 22, 2022, to January 22, 2023.
In the IMD World Talent Ranking, the Netherlands continues to hold ninth place from the previous year. It moved up by two spots in Appeal to third and one slot to 16th in Investment & Development. The Netherlands saw a rise in FDI of 24.0 USD billion in September 2022 as opposed to 23.2 USD billion in the previous quarter. By market value, ASML was the largest corporation as of November 15, 2022. At that time, ASML had a market value of nearly 229.5 billion dollars, while Prosus was close behind with a market capitalization of roughly 118.8 billion dollars.
4. Spain
5Y avg GDP (2017-2021): $1366.7 billion
5Y avg GDP growth rate (2017-2021): 0.33%
To combat labor shortages, the Spanish govt introduced new regulations at the end of 2022. Foreign workers will be allowed to work on the jobs which are low in demand in Spain. Students will be allowed to work more than 20 hrs per week. Additionally, students who have completed their studies can have an extended 12 months to look for work while staying in the country. Seasonal workers will be given a four-year permit by the government to work for up to nine months each year. Furthermore, as part of the new Startup Act, which is expected to be passed in January 2023, Spain intends to introduce its Digital Nomad visa for foreign remote employees.
In December of last year, the Social Security of Spain recorded 2,500,677 international individuals, which indicates that there are 14,780 more foreign employees working in Spain than in November, bringing this group to 194,013 throughout the year 2022. According to SchengenVisaInfo.com, the system saw an increase of more than 311,256 foreign employees from February 2020 to that date. These figures reveal that, in seasonally adjusted terms, this amount constituted 12.3% of all Social Security subsidiaries in December.
In contrast to the previous month’s decline of 2.2 USD billion, Spain’s Foreign Direct Investment (FDI) climbed by 1.4 USD billion in October 2022. Considering the largest companies in the country, Inditex secured 1st place with a $96.04 billion market cap followed by Iberdrola with a market capitalization of $71.69 billion.
3. Italy
5Y avg GDP (2017-2021): $2011.5 billion
5Y avg GDP growth rate (2017-2021): 0.142%
Italy has 5.2 million foreign inhabitants as of January 1, 2022, including from inside the EU and outside the EU, placing it slightly over the average for all of Europe (8.4 percent). Spain (11.3%) and Germany (12.7 percent) are next. The increase in the foreign population has slowed down in recent years as a result of the flow decree, which limits immigration into Italy, as well as the significant number of new citizenships granted.
Due to a lack of skilled people in some sectors, the Ministry of Internal Affairs declared, in 2022, that it would shortly publish a new regulation that will generate 75,000 quota places for work permits. This is more than the previous number of 69,700 quota spaces available in 2021–2022. Since highly skilled workers are exempt from obtaining a quota, this decree will benefit unskilled workers, startup visa applications, and foreign nationals converting existing Italian permits to work permits. Employers will also benefit from the chance to hire more foreign workers to fill skills gaps.
By November 2022, Enel had over 53.92 billion dollars in market value, making it the biggest firm in Italy. With market capitalizations of around 52 and 43 billion dollars, ENI and Intesa Sanpaolo were the second and third-largest firms, respectively.
2. France
5Y avg GDP (2017-2021): $2736.6 billion
5Y avg GDP growth rate (2017-2021): 1.02%
Despite having a high GDP, the French govt is facing difficulties in attracting skilled workers. France has compensated for this by combining numerous work licenses for highly trained people into one. With this new permission, known as Passeport Talent, 10 categories of labor migrants can now stay for up to four years. The card is also valid for foreigners who have earned advanced degrees in France.
The permit, though its effect is difficult to assess, might significantly improve France’s appeal to foreign employees if the government supports and promotes it properly. More precisely, as it is given by consulates (and prefectures for job transfers) rather than at the regional level, its effectiveness will also depend on coordinating inter-ministerial policies, educating companies, and connecting them with foreign talent.
According to EY, following COVID-19, investment in France increased by 24% to 1,222 projects in 2021, compared to 985 projects in the previous year. This made France the most attractive country in terms of foreign investments in 2021. Foreign Direct Investment (FDI) in France climbed by 6.2 USD billion in November 2022 as opposed to 5.0 USD billion in the previous month.
As of November 2022, LVMH held the top spot in France in terms of market value, with a market capitalization of over 366.3 billion dollars. Following closely after were L’Oréal and Hermes, whose market capitalizations were 192.9 and 159.1 billion dollars respectively.
1. Germany
5Y avg GDP (2017-2021): $3925.2 billion
5Y avg GDP growth rate (2017-2021): 0.63%
At the end of 2022, the German govt introduced new visa regulations in order to attract more skilled workers from outside the borders. To make it simpler for foreign people to work in Germany, the nation intends to modify its immigration laws. Federal Foreign Minister Annalena Baerbock stated at a news conference held at the Federal Office for Foreign Affairs (BfAA) on January 17, 2023, that modernizing the visa procedure would entail “turning it upside down.” She emphasized streamlining the system and enhancing digitalization and efficiency.
This new system, introduced in November 2022, is known as “Chancenkarte” and will employ a points-based system to make it easier for people with the necessary skills to enter Germany. The points-based system will consider candidates’ credentials, work history, and language proficiency, among other factors. This new regulation will attract foreign talent, especially from the third world, to the country.
According to IMD World Talent Ranking 2022, Germany stands at 10th place among the 63 countries. It has gone down by two ranks in Readiness and one place in Investment & Development, placing 12th overall in both categories. In contrast, Germany rose from ninth to eighth place in Appeal. Germany does rather poorly in other Investment & Development categories, despite placing second in the adoption of apprenticeships. It comes in at number 39 in terms of overall public spending on education, pupil-teacher ratios (primary and secondary), and, to a lesser extent, the proportion of women in the labour force (28th).
In September 2022, Germany’s Foreign Direct Investment (FDI) increased by 2.3% of the nation’s nominal GDP, up from 1.4% the previous quarter. In November 2022, Foreign Direct Investment (FDI) grew by 14.5 USD billion. The top 2 companies in Germany with the largest market cap include SAP with a market cap of $127.28 billion and Siemens with a market cap of $102.04 billion.
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