Berliner Boersenzeitung - Europe's Economic Self-Sabotage

EUR -
AED 4.265501
AFN 79.959635
ALL 97.551953
AMD 444.46094
ANG 2.078392
AOA 1064.918946
ARS 1479.215873
AUD 1.786713
AWG 2.090354
AZN 1.975233
BAM 1.953542
BBD 2.336991
BDT 140.48763
BGN 1.955288
BHD 0.437871
BIF 3449.133381
BMD 1.161308
BND 1.489103
BOB 7.996758
BRL 6.445372
BSD 1.157437
BTN 99.603607
BWP 15.636284
BYN 3.787891
BYR 22761.632973
BZD 2.325003
CAD 1.595718
CDF 3351.534207
CHF 0.932877
CLF 0.029202
CLP 1120.604148
CNY 8.342492
CNH 8.343457
COP 4651.920352
CRC 584.01805
CUC 1.161308
CUP 30.774657
CVE 110.156182
CZK 24.645271
DJF 206.112842
DKK 7.462018
DOP 69.630616
DZD 151.409562
EGP 57.379284
ERN 17.419617
ETB 160.638231
FJD 2.620376
FKP 0.864967
GBP 0.865772
GEL 3.147341
GGP 0.864967
GHS 12.066081
GIP 0.864967
GMD 83.032941
GNF 10043.991577
GTQ 8.881227
GYD 242.061922
HKD 9.115094
HNL 30.291815
HRK 7.533981
HTG 151.96857
HUF 399.328456
IDR 18944.298088
ILS 3.900177
IMP 0.864967
INR 100.097538
IQD 1516.315169
IRR 48905.571821
ISK 141.783813
JEP 0.864967
JMD 185.553506
JOD 0.8234
JPY 172.733501
KES 150.04462
KGS 101.556215
KHR 4639.377052
KMF 494.137152
KPW 1045.141109
KRW 1618.642786
KWD 0.354977
KYD 0.964555
KZT 618.16467
LAK 24960.557705
LBP 103709.044296
LKR 348.828414
LRD 232.070749
LSL 20.725305
LTL 3.42904
LVL 0.702464
LYD 6.294673
MAD 10.488378
MDL 19.676732
MGA 5174.798967
MKD 61.541866
MMK 2437.556121
MNT 4164.759726
MOP 9.357836
MRU 46.04312
MUR 53.082892
MVR 17.879229
MWK 2006.982842
MXN 21.792402
MYR 4.929731
MZN 74.276675
NAD 20.725305
NGN 1771.993034
NIO 42.597187
NOK 11.948638
NPR 159.3642
NZD 1.951822
OMR 0.446525
PAB 1.157262
PEN 4.106079
PGK 4.863112
PHP 66.422174
PKR 329.753675
PLN 4.258234
PYG 8959.149725
QAR 4.220231
RON 5.073642
RSD 117.113188
RUB 90.582059
RWF 1663.328239
SAR 4.35601
SBD 9.637515
SCR 17.053094
SDG 697.364694
SEK 11.299313
SGD 1.492652
SHP 0.912606
SLE 26.53569
SLL 24352.048595
SOS 661.435212
SRD 42.831338
STD 24036.726887
SVC 10.128082
SYP 15099.146569
SZL 20.721174
THB 37.684499
TJS 11.065269
TMT 4.07619
TND 3.409132
TOP 2.719903
TRY 46.891722
TTD 7.857306
TWD 34.174385
TZS 3026.120791
UAH 48.456698
UGX 4146.921328
USD 1.161308
UYU 46.823745
UZS 14790.516583
VES 135.832348
VND 30378.650865
VUV 138.934041
WST 3.205365
XAF 655.298379
XAG 0.030462
XAU 0.000348
XCD 3.138492
XDR 0.814981
XOF 655.298379
XPF 119.331742
YER 280.281768
ZAR 20.698338
ZMK 10453.163779
ZMW 27.055274
ZWL 373.940639
  • CMSC

    0.0900

    22.314

    +0.4%

  • CMSD

    0.0250

    22.285

    +0.11%

  • RBGPF

    0.0000

    69.04

    0%

  • SCS

    0.0400

    10.74

    +0.37%

  • RELX

    0.0300

    53

    +0.06%

  • RIO

    -0.1400

    59.33

    -0.24%

  • GSK

    0.1300

    41.45

    +0.31%

  • NGG

    0.2700

    71.48

    +0.38%

  • BP

    0.1750

    30.4

    +0.58%

  • BTI

    0.7150

    48.215

    +1.48%

  • BCC

    0.7900

    91.02

    +0.87%

  • JRI

    0.0200

    13.13

    +0.15%

  • VOD

    0.0100

    9.85

    +0.1%

  • BCE

    -0.0600

    22.445

    -0.27%

  • RYCEF

    0.1000

    12

    +0.83%

  • AZN

    -0.1200

    73.71

    -0.16%


Europe's Economic Self-Sabotage




Europe, once a beacon of economic prowess, is grappling with challenges that threaten its unique economic model. The European Union's economy, valued at approximately $20.29 trillion in nominal terms in 2025, stands as the second largest globally, yet it faces stagnation and competitive decline. Germany, France, and Italy, which collectively account for over half of the EU’s GDP, are pivotal to this narrative, but their struggles reverberate across the bloc.

The EU’s economic woes stem from a confluence of internal and external pressures. Germany, the bloc’s largest economy, contracted by 0.3% in the final quarter of 2023, hampered by high energy costs, a shortage of skilled labour, and chronic underinvestment in infrastructure. The automotive sector, a cornerstone of German industry, faces existential threats from Chinese electric vehicle manufacturers, who are flooding European markets with affordable alternatives. Central and Eastern Europe, heavily integrated into German supply chains, feel the ripple effects, with countries like Hungary and Slovakia at risk as demand falters.

Innovation, or the lack thereof, is a critical issue. The EU has failed to meet its target of spending 3% of GDP on research and development, languishing at around 2% for decades. This shortfall is stark when compared to the United States, where tech giants like Amazon and Alphabet dominate global innovation. Europe’s universities, with only one institution in the global top 30, struggle to drive cutting-edge research, and much of the bloc’s R&D funding is misallocated, particularly in Germany, where it is heavily skewed towards the automotive sector. This lack of diversification leaves Europe vulnerable in a rapidly evolving global economy.

Energy policy further complicates the picture. Despite a 26% reduction in greenhouse gas emissions per employed person over the past decade, 70% of the EU’s energy still comes from fossil fuels, and the bloc remains 63% dependent on imported fuel. The push for renewables, while commendable, is uneven—Sweden leads with nearly two-thirds of its energy from renewable sources, while countries like Ireland and Belgium lag behind. High energy prices, exacerbated by geopolitical tensions and the loss of Russian gas supplies, have strained energy-intensive industries, particularly in Germany.

Trade dynamics add another layer of complexity. The EU is the world’s largest exporter of manufactured goods and services, accounting for 14% of global trade. However, the spectre of tariffs, particularly from the United States, looms large. With over €500 billion in annual exports to the U.S., any imposition of tariffs could devastate European industries. The EU’s response—potential counter-tariffs or World Trade Organization complaints—may not suffice to protect its markets, especially as global supply chains face disruptions from conflicts and protectionist policies.

Internally, the EU’s single market, a cornerstone of its economic integration, is under strain. Calls for deeper integration, including a capital markets union and harmonised regulations, are met with resistance from member states guarding national interests. The EU’s budget, at €2 trillion for 2021–2027, is substantial but insufficient to address cross-border challenges like defence or green energy transitions. Moreover, the Council of Ministers’ veto system hampers swift decision-making, stalling progress on critical issues like a unified defence policy or fiscal coordination.

The EU’s social model, with 26.8% of GDP spent on welfare in 2023, is a point of pride but also a burden. High public debt in countries like Greece, Italy, and France, all exceeding 100% of GDP, limits fiscal flexibility. Austerity policies in the past have stifled growth, and the bloc’s projected population decline—to 420 million by 2100—raises concerns about sustaining this model amid an ageing workforce.

Geopolitical fragmentation exacerbates these challenges. The EU’s trade openness, with extra-EU trade exceeding 40% of GDP, makes it vulnerable to global disruptions. Initiatives like the Global Gateway aim to build resilient supply chains, but they compete with China’s Belt and Road and face internal coordination hurdles. Meanwhile, the euro, the world’s second most traded currency, is under scrutiny as global debt levels soar and the U.S. dollar’s dominance raises questions about financial stability.

Europe’s tourism sector, a bright spot, underscores its cultural and economic allure, accounting for 60% of global international visitors. Yet, even this strength is at risk from economic uncertainty and potential trade wars, which could deter visitors and disrupt the 1.1 billion annual tourism trips by EU residents.

The EU stands at a crossroads. Its unique blend of free-market principles and social welfare, coupled with an integrated single market, has long been a global model. However, without bold reforms—streamlining regulations, boosting innovation, diversifying energy sources, and deepening integration—the bloc risks undermining its economic vitality. The path forward demands urgency and unity, lest Europe’s economic legacy becomes a cautionary tale.