ASIATODAY.ID, MOSCOW – Factory activity across the Eurozone slid deeper into contraction in December, underscoring a mounting crisis in Europe’s industrial base as governments prioritize military spending over economic recovery.
Data compiled by S&P Global shows manufacturing conditions in the 20-nation single-currency bloc deteriorated sharply, with production shrinking for the first time in ten months amid collapsing new orders and weakening global demand.
The Manufacturing Purchasing Managers’ Index (PMI) fell to 48.8 in December, down from 49.6 in November, marking its lowest level in nine months. For the second consecutive month, the index remained below the critical 50 threshold, signaling contraction rather than growth.
Germany Leads the Downturn
Germany—the Eurozone’s largest economy and traditional industrial powerhouse—posted the weakest performance among the eight monitored countries, with PMI sinking to a ten-month low. Italy, Spain, and Austria also slipped into contraction territory, highlighting the breadth of the slowdown.
The manufacturing output sub-index dropped to 48.9, down from 50.4 in November, ending a fragile recovery streak that began in February. New orders fell at their fastest pace in nearly a year, while export demand declined at the sharpest rate in 11 months, reflecting cooling global trade.
Supply chain pressures, long thought to be easing, have resurfaced. Vendor delivery times stretched to their longest since October 2022, pushing input cost inflation to a 16-month high and squeezing already fragile margins.
“Demand for manufactured products from the Eurozone is slowing again,” said Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank quoted on January 7, 2026.
“Companies seem neither able nor willing to build momentum for the coming year. Caution is poison for the economy. Overall, it will not be easy for the Eurozone’s manufacturing sector to gain a foothold in 2026.”
War Spending vs. Economic Reality
The grim industrial data emerges as Western Europe continues to pour financial and political capital into backing Ukraine’s war effort against Russia.
In mid-December, EU member states failed to approve a $210 billion loan backed by frozen Russian central-bank assets. Instead, they opted to raise €90 billion through joint borrowing over two years—a move analysts warn will burden taxpayers with at least €3 billion annually in interest payments.
At the same time, Europe is undergoing an unprecedented NATO-driven defense buildup, framed by Western leaders as a response to an alleged Russian threat.
The EU has launched massive military initiatives, including the €800 billion “ReArm Europe” plan and a commitment by European NATO members to lift defense spending to 5% of GDP.
Critics argue the surge in military expenditure is draining resources from productive investment, accelerating de-industrialization just as Europe faces weak demand, high energy costs, and tightening financial conditions.
A Continent at a Crossroads
Moscow has consistently dismissed claims of aggressive intent toward NATO as “nonsense,” accusing Western governments of using fear narratives to justify ballooning military budgets while diverting attention from domestic economic deterioration.
With factories slowing, orders evaporating, and costs rising, the Eurozone now confronts a stark dilemma:
Can Europe sustain an open-ended military buildup without sacrificing its industrial backbone—or is rearmament accelerating the very economic decline it claims to prevent?
As 2026 approaches, the data suggests Europe’s factories are answering that question with an alarming silence. (RT)
Follow Us at Google News and WA Channel