| Much has been written in recent months about Europe’s alleged economic decline, especially compared to the United States. It is important for Europe to compare itself with the economically leading (at least so far) USA. Europe should aspire to remain at the forefront economically and technologically. Nevertheless, one should not forget that Europe has not developed worse compared to other advanced economies – especially Canada, Australia, or Japan. The US economy has thus far been more of an outlier on the upper end. Besides the economic successes of the USA, one should not forget that inequality and political polarization are particularly high there. GDP per capita in the USA has recently increased significantly more than in Europe (Figure 1). In the USA, economic output per capita has always been higher than in most European countries. The gap has widened in recent years. Switzerland was long significantly wealthier than other countries. However, its lead compared to other advanced economies has steadily decreased. Germany and Austria consistently remain above the average in the Eurozone. In the United States, economic output per capita – and thus average income per capita – is high partially because Americans work significantly more on average than Europeans. If the lower labor input in Europe is based on preferences for more leisure time, this is not necessarily bad. One must simply be aware that material prosperity decreases somewhat with lesslabor input. Central to the long-term development of economies is the development of productivity – that is, economic output per hour worked. Here, Europe’s development compared to the USA is less concerning (Figure 2). In the 1990s, Germany and Austria, for example, had higher productivity than the US economy. Since the turn of the millennium, however, US productivity has developed better, especially compared to the average of the entire Eurozone. This is mainly due to better developments in information and communication technologies. In terms of productivity, Switzerland’s lead over other economic areas has gradually deteriorated. In Europe, productivity development is heterogeneous. In one group of European countries, productivity development is quite solid and very similar (Figure 3). These include, alongside Germany and Austria, countries such as France, Belgium, the Netherlands, Denmark, or Sweden. In another group, which includes Italy and Spain in particular, productivity development has been disappointing in recent years. The overall quite solid development of many European countries is also evident when comparing with other advanced economies of the world. Thus, productivity in Germany (and the entire core European group) is significantly higher than in Australia, Japan, Canada, or the United Kingdom. Even the average of the Eurozone is still slightly above these other countries. Overall, Europe’s productivity is still high. It would be wrong to speak of a decline. However, it cannot be denied that developments in recent years have mostly been disappointing. Panic and talk of a decline in Europe are misplaced, but Europe’s aspiration should nevertheless be to grow more dynamically economically again. This also applies to Switzerland. The situation there is still more comfortable. But the gap to other advanced economies has steadily narrowed. |
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