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EU cannot keep pace with US and China in economic growth
“Política Exterior” magazine carries out a comparative analysis of the economic growth of the European Union (EU), the United States (US) and China. In its opinion, Europe's decisions in recent years have highlighted its weaknesses in the struggle for global leadership. Europe's slower economic growth would be the consequence of its failure to lead in some of the leading sectors, poor policy decisions, and its inability to keep pace with the US and China, not least because of a less flexible regulatory framework. On the positive side, the EU has established itself as the welfare region par excellence.
Key points of the article:
The economies of Europe and the UK are growing well below those of the US and China:
- 15 years ago, the size of the European economy was 10% larger than that of the US, however, by 2022 it was 23% smaller. The GDP of the European Union (including UK before Brexit) has grown in this period by 21% (measured in dollars), compared to 72% for the US and 290% for China.
Slower economic growth would be the consequence of Europe's failure to lead in any of the leading sectors:
- Technology: According to the article, none of the major technology companies are based in Europe. And the big American and Chinese multinationals are spread across the entire technology industry, from electronic components (chips, mobile phones and computers) to app development companies, websites and e-commerce.
- Energy: Europe has preferred to import cheap gas from Russia and some African countries, which has given Moscow "a very powerful weapon" against the EU that has provoked an economic recession. The EU's ban on fracking unlike what happened in the US is taking a financial toll on European families.
- Defense: The EU remains dependent on NATO defences, i.e. the US, to protect it from external threats. The invasion of Ukraine has prompted European countries to increase their defence spending again.
Regulatory impact: According to the article, Europeans find it almost impossible to keep pace with the US and China in economic growth because of strict state aid laws and the inability to promote large national champions due to competition rules.
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