Europe is facing serious challenges that threaten its economic stability, writes Politico.
The return of Donald Trump to the White House, declining global demand, and stagnation in innovation expose the vulnerabilities of the region’s economy.
Once a leader in technological innovation, Europe is rapidly losing ground. Only 4 of the world’s 50 largest tech companies are based in the EU, and European automakers are falling behind in the electric vehicle sector. Investments in research and development remain at 2% of GDP, significantly below the 3% target.
Potential tariffs on exports to the United States, Europe’s largest market, threaten to deal a heavy blow to its industries. Instead of pursuing a long-term development strategy, the EU merely reacts to changes, highlighting the absence of a unified plan.
High energy costs, expensive labor, and a shortage of skilled workers exacerbate the situation. Germany’s economy, the key driver of the EU, is suffering from a crisis in its automotive industry and structural problems.
Growing budget deficits in countries like France are putting generous social systems at risk. This could lead to political radicalization, as seen in Greece during its 2010 debt crisis.
Europe urgently needs to reform its economic model to remain competitive and ensure sustainable growth. Without decisive action, the region risks being left behind.
