I was blissfully unaware of this story. Perhaps you have also missed out on it. According to the Financial Times Europe is becoming an also-ran in the clash of civilizations.
Over the course of the past fifteen years the European economy has gone from being on a par with America to being an also-ran. From being somewhat larger than America’s economy, Europe has gotten to the point where the United States economy is nearly a third larger:
As Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations point out: “In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $ 25tn, whereas the EU and the UK together had only reached $19.8tn. America’s economy is now nearly one-third bigger. It is more than 50 per cent larger than the EU without the UK.”
Europe is now losing out when it comes to technology, energy and military hardware. It no longer even dreams of autonomy. It increasingly depends on the United States.
The US economy is now considerably richer and more dynamic than the EU or Britain — and the gap is growing. That will have an impact well beyond relative living standards. Europe’s dependence on the US for technology, energy, capital and military protection is steadily undermining any aspirations the EU might have for “strategic autonomy”.
In 2008, the EU and the US economies were roughly the same size. But since the global financial crisis, their economic fortunes have dramatically diverged. As Jeremy Shapiro and Jana Puglierin of the European Council on Foreign Relations point out: “In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $ 25tn, whereas the EU and the UK together had only reached $19.8tn. America’s economy is now nearly one-third bigger. It is more than 50 per cent larger than the EU without the UK.”
When it comes to technology, Europe has lagged. In truth, it seems incapable of doing anything beyond regulating and punishing the great American tech firms. It has none of its own. Dare we mention that China is hard at work competing against America in technology.
The European technology landscape is dominated by US firms such as Amazon, Microsoft and Apple. The seven largest tech firms in the world, by market capitalisation, are all American. There are only two European companies in the top 20 — ASML and SAP. Whereas China has developed domestic tech giants of its own, European champions are often acquired by American companies. Skype was bought by Microsoft in 2011; Deep Mind was bought by Google in 2014. The development of AI is also likely to be dominated by American and Chinese firms.
With the exception of Great Britain, the world’s great universities are not in Europe:
The leading universities that feed the pipeline of tech start-ups in the US are lacking in the EU. The Shanghai and THE rankings of the world’s top universities both have only one EU institution in the top 30. (Britain does better — courtesy of Cambridge, Oxford, Imperial and others.)
Compare and contrast the work of building semiconductors. Europe lags both America and China. Note that China is building many more facilities than we are:
In 1990, Europe made 44 per cent of the world’s semiconductors. That figure is now 9 per cent; compared with 12 per cent for America. Both the EU and the US are rushing to build up their capabilities. But while the US is expected to see 14 new semiconductor plants come on stream by 2025, Europe and the Middle East will add just 10 — compared with 43 new facilities in China and Taiwan.
When it comes to energy, we have plentiful supplies, but Europe does not.
Unlike Europe, the US also has plentiful and cheap domestic supplies of energy. The shale revolution means that America is now the world’s largest producer of oil and gas. Meanwhile, energy prices in Europe have soared. The Ukraine war and the loss of cheap Russian gas mean that European industry typically pays three or four times as much for energy as their American competitors. Gloomy European bosses say this is already leading to factory closures in Europe.
Europe still leads the world in one area. Call it luxury goods, from LVMH to fashion brands to wine and cheese and tourism.
Europe does outperform in “lifestyle” industries. Almost two-thirds of the world’s tourist arrivals are into Europe. The luxury goods market is dominated by European companies. Football, the world’s most popular sport, is dominated by European teams — although many of the biggest clubs are now owned by Middle Eastern, American or Asian investors.
Europe’s dominance of lifestyle industries underlines that life in the old continent is still attractive for many. But perhaps that is part of the problem. Without a greater sense of threat, Europe may never summon the will to reverse its inexorable decline in power, influence and wealth.
So, Europe is losing power, influence and wealth. But, it is hard at work promoting green energy. Could it be that Europe, for turning away from capitalism and toward socialism, is now paying a price for its dereliction? Anyway, for those who seek a consoling thought, Europeans seem to have better work/life balance.
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