Trend Erosion of the external pillars behind Europe's post-Cold War growth

Summary

Since the end of the Cold War Europe has grown on three external supports: expanding trade under multilateral rules, relatively cheap Russian energy and a US-led security order. The report, following Draghi, judges that all three are weakening at the same time. Russia's invasion of Ukraine, US-China strategic rivalry and the trade and security policies of the second Trump administration have raised energy, security, trade and supply-chain risks together. Openness makes the bloc especially exposed, since trade was equivalent to 43 percent of EU GDP in 2019 and slower world trade growth is expected ahead. As a result, the report argues, European competitiveness can no longer be understood through productivity alone but must be read alongside this compound external shift.