European textile and clothing production has now declined for three consecutive years, and the sector's main trade body says the EU is running out of time to stop the exit of manufacturing capacity.

The European Apparel and Textile Confederation (Euratex), the Brussels-based body representing an industry of roughly 1.3 million workers across 200,000 mostly small and medium-sized companies, issued the warning in its latest economic update on Thursday.

"Every week, textile factories close across Europe," Euratex wrote. "Behind each closure: jobs lost, communities affected, strategic capabilities gone." The sector logged negative results across several key indicators for the third year running — what the group described as a "continued erosion of competitiveness across Europe."

The production data tracks the decline. Manufacturing volumes have trended consistently downward since mid-2022, with output in sub-sectors such as nonwovens down 2.2 percent by 2025. The clothing sector posted a temporary revenue bump of roughly 5 percent in 2023, an "inflationary" effect Euratex now treats as illusory; that gain vanished in 2024 and 2025 as real demand collapsed. Textile employment hit its lowest point in 2025, with losses accelerating to minus 4.6 percent.

No single factor explains the trajectory, the trade group said. Structurally high energy costs, sluggish consumer demand, rising import pressure from Asia, unfair competition from online platforms and an increasing regulatory squeeze on European producers have combined into what Euratex called a perfect storm of stress points.

The policy gap

The European Union is preparing several responses, including customs reform, consolidation of the bloc's energy markets and the "Buy European" strategy known as the Industrial Accelerator Act. But many companies cannot wait for those measures, Euratex said. It called on the European Commission and member states to take "immediate action" to cut energy costs, streamline regulation and strengthen market surveillance so imports meet the same safety and environmental standards as goods made in the bloc — or risk losing the sector altogether as generations of expertise drain away.

One specific ask: stay on track with eliminating the 150-euro customs duty exemption threshold, set for this July. Critics of the de minimis rule say it has benefited overseas e-tailers such as Shein and Temu at the expense of domestic businesses.

Other planned mechanisms move too slowly for Euratex. A "deemed importer" system under the Union Customs Code will not apply until 2028, which the group said is "too slow" to address the current surge of non-compliant imports. It wants the EU to adopt a regulation requiring foreign sellers to appoint a legally accountable entity in Europe before then.

Downstream exposure

The stakes reach beyond apparel supply chains. Euratex warned that the sector's hollowing out threatens critical inputs for the healthcare, defense and automotive industries, which rely on high-performance European textiles, and risks undermining the EU's Green Deal goal of making the world's largest single market climate-neutral by 2050.

The circular-economics are already stretched. A March report by the Boston Consulting Group and ReHubs, a textile-to-textile recycling initiative backed by Euratex, put the cost of building a circular textile economy in the EU at 11 billion euros in capital expenditure plus up to 6.5 billion euros in annual recurring costs. Without a local industrial base, the infrastructure needed to recycle textiles disappears along with the factories.

"If Europe is serious about maintaining its manufacturing base, it must act faster and more decisively. Every week, textile companies are closing," Euratex president Mario Jorge Machado said in a statement. "Production moves elsewhere, dependency increases and the carbon footprint grows. That is the opposite of what Europe wants to achieve."

For sourcing teams, the signal is direct. Buyers counting on European mills for technical, compliant or nearshore capacity should map which of their tier-1 and tier-2 suppliers sit in the at-risk SME base, and build contingency sourcing plans before capacity, not just orders, disappears.