Rabobank’s Michael Every portrays Europe as stuck around a 1.5% growth path, with German deindustrialization offset by rearmament and political fragmentation. It highlights the EU’s efforts in implementing single market reforms, the tensions over carbon border tax changes, and the difficulties in promoting the utilize of the euro and Eurobonds in lieu of stablecoins while third countries continue to entrench themselves in dollar-based practices.
Deindustrialization, politics and euroambitions
“In Germany, Bosch is set to lay off 20,000 workers as part of deindustrialization, and yet German rearmament continues. The latter is boosting GDP growth, but without a recovery in other industries (and why assume that?), current trends predict that the German economy will face a completely different one – even more so if Europe does not produce the weapons with which it is arming itself. However, once the United States hands over two key NATO command posts to the Europeans,”
“On broader European efforts to separate from the US – signing up to the US critical minerals plan, which suggests the opposite – FT reports that ‘EU fails to implement economic solutions to single market collapse’ and ‘urgently’ needed European alternatives to Visa and Mastercard; Politico, however, claims that this week “Macron is selling a ‘Made in Europe’ vision that Merz and Meloni are not buying” while “European industry is revolting over the EU’s plan to weaken the carbon border tax” (Politico), which claims the opposite. What exactly is the EU’s grand macro strategy?”
“For now, it seems defensive in a different sense. As Politico also notes, ‘the surprise departure of the head of the Bank of France raises suspicion among Macron’s opponents,’ and ‘the governor’s departure allows the French president to future-proof the central bank against a far-right government.’
“Similarly, while Europe is considering issuing more Eurobonds to back up euro stablecoins and “has a plan to undermine the global role of the dollar,” “the sticking point is… changing established practices in third countries using dollars… As a next step, the Commission proposes “to better understand the obstacles to the wider use of the euro, while fully respecting national choices regarding monetary arrangements.”
(This article was created with the aid of an artificial intelligence tool and has been reviewed by an editor.)
