For fans of economic growth, Donald Trump is bad news. The US is the planet’s ‘growth engine’, powering wealth creation and technological progress while the rest of the world (such as Europe) languishes. We rely on America to drag us up with them. Trump’s tariffs and chaotic policymaking present the first serious threat to US growth in a generation, which has knock-on effects for Europe’s growth prospects.
Rather than just mitigating the damage, Europe should see this as an opportunity. As the US falters, the role of the world’s ‘growth engine’ is becoming vacant. Europe could step in to fill the gap. Liberal democracies outside the US should club together to slim down regulations, keep taxes low and simple, invite investment, and act as world leaders on growth and innovation. This week, top politicians from the UK and EU will meet for a summit in London. This is a prime opportunity to cement a new pro-growth working relationship.
Domestically, British prime minister Sir Keir Starmer has insisted he will not ‘choose between’ pursuing closer economic ties with the US or the EU. There are many who have strong views on which of the two he should ‘pick’ ahead of the other. The subtext of that debate is whether Starmer should lean towards American-style free-market economics or concede to the supremacy of vast EU regulation over the British economy. In reality, there is no such trade-off. Starmer can forge closer ties with the EU while prioritising growth.
The EU says it wants growth, much like the British government, and is willing to deregulate to achieve it. It’s time to put that claim to the test. Rather than getting hung up on politicking, summit-goers should focus their attentions on material ways both sides can lower barriers to trade and enterprise. From technology to agriculture, there is widespread potential for Britain and the EU to agree mini-deals to facilitate cross-border trade, open up each other’s markets, and stoke growth.
The summit can become a crucial first step towards building a new, growing Europe. Growth is not rocket science. At its core, it requires politicians getting out of the way. It’s not about ideology: it’s about sensible regulation. Want EU tech to grow? Pare back the Digital Markets Act, GDPR, and the AI Act. Want more energy? Invest in nuclear. Want Europe to be healthier and safer? Prioritise smoke-free policies like low tobacco taxes which keep tobacco out of the hands of criminal gangs. Want green growth? Strip back onerous environmental rules like CBAM, Farm to Fork, and the Green Deal.
The EU has already signalled its awareness of the gaps left in global markets by the US’s recent inwards retreat and its willingness to move to fill those gaps. The opportunities are not just in economic policy. On science, for example, Europe has spotted a chance to lure top American talent across the Atlantic Ocean to boost research and development and take advantage of uncertainty and ill-feeling in the US science community.
“The role of science in today’s world is questioned. The investment in fundamental, free and open research is questioned. What a gigantic miscalculation,” said European Commission president Ursula von der Leyen recently. Hopefully, bringing in some of the world’s top scientists will help Europe steer clear of unscientific policies which rely on faulty data like nicotine pouch bans and instead prioritise innovation, low taxes, open markets, and simple regulations.
News headlines after the UK-EU summit may hone in on defence and security agreements, but that is only half the story. The opportunity for a pro-growth Europe is immense. European politicians should grab the chance to become world leaders on economic growth before other, less favourable nations seize that power for themselves.
As America has become richer in recent years, the rest of the world has benefitted immensely. If the US no longer wants to fulfil that role, there is no reason why Europe can’t do it. Not long ago, the eurozone economy was roughly the same size as America’s. Today, the US economy is double the size. Europe has a lot of catching up to do. Let’s get started this weekend.
