Europe’s Jobs at Risk: ABB CEO Warns Regulatory Overhaul Is Urgent Amid Energy Shock

The automotive industry is expected to bear the worst of it. The Commission's internal analysis, as reported by Bloomberg, indicates that roughly 600,000 jobs in car manufacturing could be under threat . Clean energy sectors, often considered a growth engine for the continent, are also vulnerable. Around 85,000 jobs in battery manufacturing and nearly 59,000 in heat pump production could be lost as investment stalls .

This employment shock arrives alongside broader macroeconomic weakness. The European Commission’s Spring 2026 Economic Forecast projects EU GDP growth will slow to just 1.1% in 2026, down from 1.5% in 2025, while overall employment growth in the bloc is expected to crawl at just 0.3% . Energy inflation is projected to peak above 11% in the second quarter of 2026 and remain elevated for the rest of the year, keeping intense pressure on household budgets and company balance sheets .

Sectoral Exposure and the Domino Effect

The crisis is not evenly distributed. Energy-intensive industries are at the epicenter. The ECB has estimated that a permanent 10% increase in electricity prices could reduce employment in these sectors by up to 2% . The risks, however, do not stop at factory gates. The ECB also warned that for every job lost in high-tech manufacturing, several more could be lost in the local services economy, creating a multiplier effect that devastates regional communities .

This vulnerability is layered on top of a pre-existing erosion of Europe's industrial core. A European Commission communication from January 2026 had already warned that "Europe’s industrial base is eroding, leading to a loss of manufacturing jobs and factory closures" due to both external competitive pressures and persistent internal barriers within the Single Market . The current energy shock is accelerating that trend. Goldman Sachs Research forecasts that higher energy prices could reduce European industrial production by 2% by the end of 2027 compared to its pre-conflict trajectory .

The UK's Outsized Exposure

The United Kingdom, while no longer an EU member, is facing a particularly severe version of this crisis. According to the OECD’s June 2026 outlook, the UK is on track for the largest unemployment rise among G7 nations this year. The jobless rate is projected to climb to 5.5%, up from 4.8% in 2025 . A separate independent report projects a net loss of 163,000 jobs in the UK in 2026, with a 0.4% overall decline in employment that falls hardest on lower-income regions such as south Wales (projected loss of 5,700 jobs) and the Humber (2,800 jobs) .

The wider economic context is grim. GDP growth in the UK is forecast to slow to just 0.9% in 2026, a near-halving from the 1.4% recorded in 2025, as the energy shock squeezes real incomes. Inflation is expected to accelerate to 3.7% this year, driven by higher fuel and energy costs . Some independent forecasters, including the EY Item Club, have warned that the UK could be pushed to the brink of a technical recession, with unemployment potentially peaking as high as 5.8% by mid-2027 if energy prices remain elevated .

The Regulatory Battle Behind the Economic Warnings

Morten Wierod’s call for deregulation is not just an abstract plea. A joint employers’ contribution ahead of the 2026 European Semester identified the regulatory environment as the primary challenge to investment in the EU, ranking above even high energy prices and skilled labor shortages . The Eurochambres Economic Survey 2026, which canvasses businesses across the continent, confirmed that high labor costs, regulatory burden, and a shortage of skilled workers are the top three constraints on operations .

Wierod specifically pointed to the slow implementation of reforms proposed nearly two years earlier by former Italian Prime Minister Mario Draghi, arguing that the lack of urgency among European legislative bodies is a critical failure . His warning—that he does not want to see mass unemployment become the catalyst for action—frames the next few months as a test of whether the EU can streamline its regulatory framework quickly enough to absorb an energy shock that, by the ECB's assessment, is historically unprecedented in its scale .