The economic reality of the old continent worries specialists. In recent decades, most of the population began to lose their assets.
From the saving in the purchase of food and basic products, such as oil, meat or milk; until the reduction in consumption of basic services, Europe is experiencing a radical change in its economic reality. In recent decades, a large part of the population began to impoverish.
The purchasing power of Europeans changed drastically, moving away from the image of prosperity they always had. With consumer spending in free fall, the old continent fell into recession earlier in the year, reinforcing a sense of economic and political decline that began at the turn of the century.
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Why Europe is getting poorer
The current situation in Europe stems from a long process that is still developing, and which peaked with the Covid-19 pandemic and the recent war between Russia and Ukraine. With global supply chains affected, and energy and food prices soaring, the crises exacerbated problems that had long been in the trenches.
The continent’s export industry used to be a workhorse to improve production, but energy costs and inflation -which have not been as high since the 1970s- make it difficult to gain a price advantage in international markets. Exports represent a 50% of Europe’s GDPTherefore, the lack of global trade affects them in a transcendental way.
On the other hand, the private consumption it has decreased by around 1% since the end of 2019, according to the Organization for Economic Co-operation and Development (OECD). In this framework, the wages decreased about 3% since 2019 in Germany; 3.5% in Italy and Spain; and 6% in Greece.
The situation on the European continent is making it less attractive for companies, which are making an increasing part of their sales in North America.
US competition in the European economy
Unlike Europe, the economy of the United States (USA) grew 82% in the last 15 years, according to data from the International Monetary Fund. This leaves the average EU country poorer per head than all US states except Idaho and Mississippi.
Regarding the great dependence that Europe has on global trade, the US only depends 10%which leaves you in a much less weakened position than your competition.
In front of working marketthe US has a strength that allows income to have increased by almost 9% in recent years, while real wages rose around a 6% in the same period, according to OECD data.
Source: Ambito
