Dec. 17, 2024 |
The pond gets wider. The U.S. and Europe are drifting apart, economically. The American economy grows and grows, worker productivity rises reliably each year, and the world’s top tech companies are headquartered in California.
Europe can’t compete. In 1995, worker productivity was about the same in the two regions, but now European productivity lags 20 percent behind U.S. numbers. The gap between U.S. and European GDP has meanwhile doubled over the past 20 years. U.S. start-ups have taken on about five times more in venture capital than European start-ups have over the past decade. And it doesn’t look like it’s going to get any better in 2025.
In October, the International Monetary Fund adjusted its forecast for U.S. GDP growth next year up to 2.2 percent—and for the eurozone, down to 0.8 percent. What’s happened to Europe?
Today, Martin Wolf looks at what’s expanding the gap between America’s and Europe’s economic fortunes—and what it means for European life, among poorer people especially.
—Michael Bluhm
