By contrast, the US is booming. On Friday, Wall Street’s S&P 500 index of top stocks flew to an all-time high of 4,839.8, wiping out all of the losses of the last two years. It has been driven by the so-called “Magnificent Seven” mega-cap tech stocks: Microsoft, Apple, Google-owner Alphabet, Amazon, Nvidia, Facebook-owner Meta and Tesla.
Europe is in a desperate state. Its been left trailing by the turbocharged US economy, and there’s little hope of a recovery.
In fact, things are likely to get worse.
In 2008, the EU economy (including pre-Brexit Britain) was worth $16.2trillion, while the US lagged with a value of $14.7trillion. It’s a different story today.
Now the US economy has rocketed to $25trillion, while the EU economy has edged up to just $19.8trillion (this includes the UK economy, to compare like with like).
Christian Ulbrich, the chief executive of global real estate services firm JLL, says Europe’s “wealth is melting away at rapid speed” and urgently needs reform.
Yet there’s little sign of that from Brussels.
European economic fragility was masked for years by the success of continental powerhouse Germany, whose manufacturing industry was a wonder of the world.
Yet its success was fuelled by cheap Russian energy imports, as Russian tyrant Vladimir Putin got the country hooked on its gas. His brutal invasion of Ukraine and subsequent energy shock has smashed Germany’s industrial base, driving up costs and hammering factory output.
The nation’s once proud car industry is in disarray. Exports have crashed due to the emissions scandal, falling global demand and failure to keep up with the electric vehicle (EV).
Now instead of exporting luxury Volkswagen and Mercedes gas guzzlers to China, Germany is importing fleets of dirt-cheap Chinese EVs.
Imports of Chinese vehicles and parts to Germany have jumped 75 percent, while German exports have slumped 21 percent.
Even German finance minister Christian Lindner has said the country has become “the tired man” of Europe, as it loses its competitiveness.
Last year, the economy shrunk by 0.3 percent, with the German national statistics office blaming “multiple crises”, including soaring living costs.
Fawad Razaqzada, chief market analyst at City Index and Forex.com, said: “Europe’ economic powerhouse is running out of fuel amid high inflation and interest rates.”
Carsten Brzeski, global head of macro research at Dutch bank ING, warned: “There is no imminent rebound in sight and the economy looks set to go through the first two-year recession since the early 2000s.”
He added: “We expect the current state of stagnation and shallow recession to continue. In fact, the risk that 2024 will be another year of recession is high.”
The contrast with the US couldn’t be greater. Wall Street rebounded almost 25 percent last year, as the country’s mighty technology sector flew due to the artificial intelligence revolution.
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After a bumpy first week of the year, US tech stocks are rocketing again, and the rest of the world can’t keep up.
The US economy is bombing along as unemployment falls and retail sales rise. Instead of falling into a recession as feared, William Dinning, chief investment office at fund manager Waverton, says the US faces “the best soft landing scenario of all time”.
By contrast, Europe is set for a hard economic landing with little sign of respite.
Brussels is strangling the European economy with red tape, while Washington lets US companies off the leash.
Birth rates are tumbling and the European population is ageing fast.
Worst of all, its stuck with the euro, which crushes competitiveness. Incredibly, the Italian economy has registered almost zero growth since it signed up to the single currency in 1999.
These are desperate times for Europe but we should resist the temptation to crow. The UK has issues of its own. Also, a buoyant European economy would help us, too. At least we have the US.
