How Can Europe Pay for Things That It Can't Afford?

Europe’s growth is slowing and debt rising. Closing the productivity gap with the US is firmly in Europe’s grasp. Discussions need to move from recognition to action: deepen integration, raise productivity and secure long-term fiscal sustainability.

Volume/Issue: Volume 2025 Issue 004

Publication date: November 2025

ISBN: 9798229026680

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Labor , Economics- Macroeconomics , Public Finance , Fiscal consolidation , Fiscal stance , Pensions , Europe , Eastern Europe

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Summary

Europe has managed major shocks, but growth is slowing, export gains are reversing due to tariffs, and bond markets reflect rising risks. Interest rate cuts and increased fiscal spending, including defense, have not spurred private demand. The productivity gap with the US remains wide, and structural reforms are lagging. National priorities and slow EU decision-making hinder deeper integration of capital, labor, and product markets. Without stronger growth and fiscal consolidation, average European debt could reach 130 percent of GDP by 2040, requiring significant fiscal adjustment. Near-term policies should maintain price stability, start fiscal consolidation, and keep trade open.