The European economy is apparently still in good shape: its balance of payments is in surplus; it receives over 500 billion euros in foreign investment every year; the countries of the European Union concentrate almost a quarter of the world’s computing power, far ahead of China (5.8%). It is the most pleasant place in the world to live, and the one that provides the best social protection for those who have the privilege of living there.
And yet, everything points to the fact that Europe is in rapid decline, and is even on the brink of catastrophe: it now accounts for just 25% of global GDP, compared with 35% in the early 2000s. The share of European companies in global stock market capitalization has declined rapidly in 20 years, from around 30% to just under 15%. No European company created in the last 50 years has a valuation in excess of $1,000 billion, whereas this is the case for six American companies (Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta). In terms of research, the UK is the third most innovative country in the world in only 12 of the 64 “critical technologies”; Germany in 10 technologies; Italy in 3; while France, Spain and the Netherlands never make it past 4th or 5th place. In terms of computing capacity, the European Union lags far behind the United States (25% versus 53%). When it comes to defense, European sovereignty has by no means been restored, and little is being done to achieve it: by 2023, 78% of European arms spending will have been entrusted to non-European suppliers, 63% of them to the United States.
It’s even worse if we compare the USA and Europe with the Asian powers. In 2023, the USA leads in only 7 of 64 “critical technologies”, compared with 60 in 2007. In the same year, 2023, China dominates 57 of the 64 critical technologies, 24 of which present a risk of monopoly. The data could go on and on.
Several reasons for this are clear. Firstly, Europeans work less than Americans, and obviously less than Asians: according to the OECD, Americans work an average of 1,811 hours a year, over 15% more than European workers (1,571 hours), while in all Asian countries, annual working hours exceed 2,000, and labor productivity, which determines the quality of production per hour worked, is falling in Europe, while it continues to rise everywhere else. Secondly, private European companies spend far less on research than their Chinese and American counterparts. Finally, Europe’s vocational training and lifelong learning system is lagging far behind.
It’s time to wake up. Otherwise, what is currently a slow and gentle decline could very quickly translate into a drop in Europeans’ purchasing power, and a plunge of the Old Continent into the dark waters of populism and extremism.
To bounce back, there’s only one method: a project, a program, a will, and a lot of work.
The project is simple: 1,000 reports have been written on the subject, including very recent ones by Enrico Letta, Mario Draghi and Jean Tirole. We can quickly deduce a program, both for the European Commission and for each of the member countries. What is most lacking is the will and the work. As for the will, it would exist in Europe, if it were clearly mobilized by political leaders. As for work, it’s simple: every European needs to work much more than they do now. And much longer. And to do that, we need to pay much more for work. To achieve this, we need to pay less for non-labour, including as yet uncontracted pensions; and even less for capital, within the narrow limits of its international mobility.
Much easier said than done in peacetime. But here’s the thing: we’re in a time of war. Who will understand this in time?
j@attali.com
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