The Sound of Economics Where are Europe's animal spirits?
Mar 12, 2025
Jeromin Zettelmeyer, Director at Bruegel, and Peter Praet, a seasoned macroeconomist from the ECB, dive into Europe’s economic landscape. They discuss the contrasting growth rates of the U.S. and Europe, emphasizing the need for structural reforms. The conversation highlights the challenges of a weaker euro and the call for fiscal expansion. They also examine the ECB’s monetary policies and the impact of geopolitical tensions on Europe's economy, revealing urgent investment needs and potential strategies to enhance local investment.
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US Growth and European Uncertainty
- The US economy is projected to grow faster than other advanced economies, but it's also a source of uncertainty.
- Europe experienced several supply shocks, unlike the US, impacting its economic recovery.
Europe Needs Animal Spirits
- Europe needs animal spirits which come from reforms and investments, addressing structural weaknesses.
- The European Commission embraces this, but lacks sufficient funds at the EU level.
Weaker Euro's Impact
- A weaker euro previously aided Europe's recovery, but its impact now is less clear.
- Europe's import dependence makes a weaker euro less of a guaranteed solution.