Europe's Economic Decline - How the EU fell behind US

A look at why the EU economy has under-performed and falling behind the US. It looks at role of demographics, regulations, austerity and other factors. Why decline is focused on some areas of Europe and not others. The best way to compare the economies looking at GDP per capita in $ and PPP terms, plus hours worked

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[ninavaughn]

Europe has too much red tape when creating businesses. We lived in Switzerland and my husband (German) and his Swiss friends-coworkers could not start a aerospace business due to the hassle. Other friends said selling a house in Switzerland was a huge nuisance. We just returned to the US to get back in aerospace.

[waichui]

Europe did not get into the information age. Is there European equivalent of Google, Facebook, Microsoft, Amazon? What industries are the 50 biggest companies in? Europe is also not in the new industries that are coming. Are they in artificial intelligence? 5G communications? Cloud computing?

If you are stuck with industries of the past, all the "economic statistics" just tell the result of their problems, not the root cause.

[tealady]

Finally someone talking about the Eurozone. In the UK our popular press would have us believe the UK is the only country on the continent of Europe to be struggling. Don't wish this on our eu neighbours but in some ways its comforting to know we're not alone in our floundering!!

[hughkendall]

I'm an Assistant Economist in the UK Civil Service and I love these videos!

[ep]

Here in the UK we are told that the EU is booming and that the UK is the only sick man because we bolted.

[_sky_]

As a citizen of EU, I believe we simply aren't united enough, plus we are importing too much of our energy. Nuclear energy could have saved us, but Germany had eco-zelots fighting against it. Hope that what now is happening with Ukraine will force us to united into something stronger.

[rosshilton]

The European Union was formed in November 1993 with the Maastricht Treaty. The strength of the EU was it’s protectionist anti globalisation trade barriers that made it more economic to buy from within the group. The aim of the EU was to protect member nation jobs, farming and industry, by adding tariffs to imported products.

But within six months the World Trade Organisation was established by 123 nations at a meeting in Marrakesh. This agreement was exactly the opposite to the protectionist anti globalisation trade barriers created by the EU. At its core was trade liberalisation, include binding the negotiated tariff reductions for an extended period.

This WTO agreement has created a nightmare for the EU. In theory as member nations they should abide by WTO guidelines. They ignored this for around a decade, and concentrated upon side issues like free movement within the block.

They also began a back door campaign to thwart the WTO by implementing EU standards that could be used as non tariff barriers to trade.

But by the early 2000s they were under increasing pressure to open up markets. In response to this they began negotiating Free Trade Agreements, that contained strict protectionist limitations and were FTA in name only. The agreement with Japan was actually called a Economic Partnership Agreement or EPA. It specifically limited Japanese car imports, making it a mockery, and was not an FTA.

In recent times even the FTA negotiations have collapsed. The Australia FTA fell apart, and the Mercosur FTA is falling apart when the EU wanted severe limitations on agricultural products. Hence the recent French, German, Belgian and Dutch farmer protests.

The EU is now an anachronism in a free trade world. It is desperately trying to find a justification for its existence, when in fact it’s relevance ended with the signing of the WTO.

[mdkumarz]

Only big software firm from Europe is SAP

[sunlijen]

Please do an analysis on Australia's economy, would be very interesting.

[Caius]

It's really sad to see the EU falling behind so terribly; the US Inflation reduction act and the EU's failure to mount a proper reaction (in practical terms, not just rhetoric) is disastrous

[nancypatterson]

One huge problem in Europe is the massive declining population. The EU establishment was aware of this massive problem in the 1990s. Turkish immigration helped a lot. Most Turkish muslims were not radical & assimilated quite well into the EU, particularly the German workforce. & contributed much labor to the overall economy. Since early 2000's EU, particularly Germany, brought in millions of immigrants. However, 90% were/are young men. So many refused to assimilate. Many were tramitized by war and poverty and become a burden on the very liberal social welfare resources. I understand that this is very unpopular to say & there are many immigrants that assimilate very well. Yet, this marked the beginning of the end. If not for America, Western Europe would not exist today & would have been destroyed by World War 2.

[christianlibertarian]

There is an implicit misunderstanding in this video about austerity and growth. Government spending cannot be the driver of growth, as governments for the most part simply transfer money from one group to another. Nothing grows if you just take money from George to give to Ringo. Growth happens when businesses invest to grow their business. More government simply inhibits this.

[dan]

Saying that the solution would be to increase government spending is ridiculous. The real solution is to reduce taxes, make the government more efficient and lean. That would incentivize productivity both for business and for individuals. That is the secret sauce of the US.
It is comic that economics wants Europe to spend like the US (large debt) but don't want Europe to tax like the US neither produce like the US.

[pollutingpenguin]

The US largely funds its growth by printing money and taking up more debt. At some point that’ll have to come to a hard stop.

[christopherwright]

You think the EURO has fallen? What about sterling?

[Laiquelleion]

Part of the challenge here is that there is a very big difference between the different nations of the EU. From, Rumania, Greece and Italy to Germany France to the nations in the nordics. The needs of these variety of nations is varied and hence difficult to manage.

[TheMercyBeat]

And no Croatia on the opening EU map? Croatia has been an EU member since 2013. Inform yourself before posting something!

[glennnielsen]

I very much agree with the point made here that austerity is a function of the misguided capital allocation governments have historically made, where GDP growth does not keep up with or exceeds debt growth. There is a widespread tendency for the next election to be won by spending beyond one's means. It could be considered to have a constitutional provision that a sitting government that generates a deficit or debt level of a certain size is automatically removed from power and abandoned from holding public office in the future. It would create accountability.

[dc]

Well done for a more balanced world and european overview. Europe in applying more social policies, regulations and move away from nuclear and fossil fuel production has resulted in a declining continent being left behind by americas and asia. Unfortunately a desire for more social time, less work effort and production and not being energy self sufficient the deeper into recession and debt u fall in challenging times.

[varungupta]

0:33 why does the graph show Euope’s share of the world economy to be larger than the US? America is larger right?