Economics: Is European growth on firmer footing?

Europe had lost ground with its DM peers even before the pandemic 

Even before the pandemic, Europe had lost ground with most other developed market economies. Weak capital services & productivity growth, an inability to take advantage of the rise of tech, and policy mistakes all explain why. 


Addressing underinvestment & avoiding policy mistakes is key 

Encouragingly, policy mistakes of the past have not been repeated. And with Next[1]Generation EU, as well as plans to rework the fiscal rules, there are signs that Europe is also addressing prior underinvestment. 


Demographics likely to prove the biggest challenge 

Policymakers’ biggest challenge is likely to come from demographics. A shrinking working age population means that labour is likely to be a drag on growth from here on out. Boosting net immigration could help, but looks politically unviable.


Economics: Is European growth on firmer footing?