Europe is losing

One reason change is difficult is that most Europeans will continue to enjoy a comfortable lifestyle for decades to come. “In global terms, relative decline is inevitable, but it may still be a very nice place, right?” says Sander Tordoir, an economist at the Centre for European Reform.

Many European voters might consider the relative decline in economic power to be a price worth paying for spending less time at work than Americans and living with less inequality, a more generous social safety net and higher environmental standards.

Tordoir is less pessimistic about Europe’s prospects since German Chancellor Friedrich Merz ditched the country’s debt restrictions in March, allowing it to use massive borrowing to raise consumption and invest in defense and infrastructure. Tordoir says much of Europe’s torpor in recent years was due to a stagnant Germany.