The hypothesis that Europe’s economy is falling behind that of the United States (US) has become a key topic in economic and media debate in recent months. Sébastien Bock and his co-authors (from OFCE) recently published a note[1] providing valuable background information on this subject. It covers the period 2000-2019. The more recent years marked by the health crisis and the energy crisis are not covered here, but they confirm the gap: at the end of 2023, the level of gross domestic product (GDP) in the United States will exceed that of 2019 by just over 9 points, compared with just 3.2 points in the eurozone (while Germany is stagnating).
The slowdown in European economic growth began before these shocks, indicating longer-standing structural factors. GDP per capita in the eurozone, expressed in constant dollars and purchasing power parity, grew by an average of 0.9% a year over the period studied, a rate lower than in the United States. The GDP per capita in the eurozone represented 77% of the one in the US in 2000, compared with 72% in 2019 (and 70.6% in 2022). It should be noted that the differential with the US has remained stable at 68% in the 27-member European Union (EU) (growth of 1.2% per year). China’s GDP per capita has increased fivefold over this period, but in 2019 will be only 40% of that of the EU. At national level, the picture is mixed. Germany’s GDP per capita relative to that of the United States rose slightly to a peak of almost 85% in the early 2010s, before falling to 82% in 2019. Italy has seen a steady decline from over 80% to 65%. France’s trajectory is similar to that of the eurozone.
Relative level of GDP per capita in France, Germany, Italy and Spain compared with the United States (base 100)
Source: Bock Sébastien et alii, op. cit, p. 5.
The economic and financial crisis of 2008 marked a turning point, with European economies unable to rebound as quickly and strongly as their American counterparts, facing a depression exacerbated by the sovereign debt crisis. So in their paper, the authors ask is it “ex ante fragility (institutional and/or economic) that is preventing the rebound, an inability to fully embrace the digital economy that has driven growth over the past 10 years, or […] greater vulnerability to emerging players, notably China, that is hampering the European export engine that had previously been its strength?”. To shed light on this question, they analyse
