Europe’s Elusive Growth Consensus
In most European countries, per capita GDP is currently lower than it was six years ago. Worse still, many Europeans appear to have concluded that economic growth does more harm than good in environmental and social terms.
PARIS – In most European countries, GDP per capita is currently lower than it was six years ago. In some cases, like Greece, Italy, and Ireland, it is more than 10% lower. Even in Germany, where it is higher, average growth over the last six years has been anemic.
It is hard to overestimate the adverse consequences of this state of affairs. The European Union has lost six million jobs since 2008. Many younger people who have entered the labor force in recent years have been unable to find a job corresponding to their skills and are bound to pay a price for it throughout their careers. Governments have been struggling with the impossible task of balancing their books despite dwindling revenues. And, worst of all, companies have begun discounting Europe in their investment plans, paving the way for a permanent loss of aggregate momentum.
In such a situation, growth ought to be at the top of the policy agenda. But, while the EU and national governments pay lip service to it, they have not devised an effective economic-revitalization strategy.