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Many market participants appeared astonished to learn that Von Der Leyen and Scholz in Davos were steadfastly pursuing the policies that have severely damaged the EU. However, this is typical bureaucratic behaviour.

In a predictable move, EU bureaucrats have chosen to exploit the new Trump administration as an external enemy, rather than seizing the opportunity to unleash the immense potential of their economies. Bureaucrats do not care about results; they care about bureaucracy.

Ursula Von Der Leyen expressed her unwavering commitment to upholding the European Union’s climate and economic strategies when she asserted that “Europe will continue on its current path,” a stance marked by stagnation, high taxes, low competitiveness, and excessive debt. The Paris Agreement continues to be the best hope of all humanity,” she repeated. “Europe will stay the course and keep working with all nations that want to protect nature and stop global warming.” This statement is simply incorrect. The EU has used the Paris Climate Agreement as a tool for economic and social control, causing harm to its industrial and business infrastructure. In fact, the Paris Climate Agreement has achieved the opposite of its intended goals. The EU is now more dependent on imports of liquefied natural gas and coal to address supply challenges. European Union climate policies have only reduced emissions by crippling economic growth and industrial production.

Technology, competition, and free markets are necessary for environmental defence, not interventionism.

We should not be surprised when we read that the European Commission will present its competitive compass plan without reducing government overspending or eliminating any of the taxation and legislation burdens that have crippled the European Union.

Over the past 16 years, the U.S. GDP has grown by 94%, while the European Union’s nominal GDP has only increased by 11.2%. This has happened in a period of enormous fiscal and monetary “stimulus packages,” including the Juncker Plan and the Next Generation EU Fund, as well as negative nominal rates. The European Union stagnation is a consequence of a chain of public sector-promoted spending programs that have left a trail of debt and no real productivity growth.

From 2010 to 2023, productivity in the EU increased by only 5%, significantly lower than the 22% increase in the U.S. during the same period. How can this happen?

When governments subsidise low productivity and penalise high productivity with enormous taxes, the economy slumps.

European Union officials justify this trend, citing the rise of China and emerging economies as the reasons for the European relative decline. However, the share of global GDP for the EU has decreased from 34% in 1960 to 15% in 2024, while the U.S. has seen an increase from 28% to 25% over the same timeframe.

Social indicators are also significantly poorer. The unemployment rate in the European Union was 5.9% in November 2024. In the same period, the unemployment rate in the United States was recorded at 4.2%. However, countries like Spain and Greece have unemployment rates of 11.2% and 9.6%, respectively, with the population at risk of poverty and exclusion at 27% in Spain, 25% in Greece, and an average of 21% in the EU, according to Eurostat, with 13% of the population living in poverty. In the United States, the equivalent to the European rate is 22%, with 11% of the population living in poverty.

The EU’s at-risk-of-poverty threshold for a single person in Germany, the richest nation, stood at $14,124 per year. In Spain, it stood at $10,393 according to INE. In the US, it was $14,580 according to official figures. This means the poor in the United States are richer and fewer than in Europe.

The sad truth is that the alleged social contract and enormous government spending have not helped Europe in any area, and the average tax wedge is ten points higher in the EU than in the US, according to the Tax Foundation.

In Europe, it’s quite common to blame its economic weakness on a lack of central bank support.It is simply false. The increase in money supply (M2) in the Euro Area from 2020 to 2025 was around 15%, and the balance sheet of the ECB is significantly larger than the United States Federal Reserve. The ECB’s balance sheet stands at 42% of GDP after reaching a peak of 69%, while the Fed’s balance sheet is 24.4% of GDP after reaching a peak of 37%. Furthermore, the European Central Bank (ECB) implemented negative nominal interest rates on June 11, 2014, and has kept its anti-fragmentation and liquidity tools intact.

The ECB has been characterised by a hugely accommodative policy, focusing on maintaining price stability with a target inflation rate of “below, but close to, 2% over the medium term.”

The European Union is the poster boy of neo-Keynesianism and is losing in every social and economic area, missing all its opportunities in energy, technology, and industry. Bureaucracy, high taxes, and misguided interventionist policies.

The European Union could thrive with lower government spending, tax cuts, and eliminating bureaucracy because it has the human capital, businesses, and entrepreneurs to achieve it. However, the EU leaders do not want to reduce interventionism and their economic control objectives, leading to a significant risk of the EU bowing to China instead of cooperating with the US.

The EU problem is not Trump; it is the European Union’s interventionist political agenda.

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