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Europe’s neglected key to economic security

In this post:

  • Europe needs to boost domestic demand to ensure economic security, following examples set by the US and China.
  • The European Commission’s new economic security strategy focuses on enhancing competitiveness and deepening the single market.
  • Resolving Europe’s economic risks requires both political and corporate consensus.

Economic robustness is the lifeline that ensures both individual and corporate freedom, and the same principle extends to nations. Europe, known for its economic resilience, is realizing the necessity of bolstering its financial strength to ensure self-determination.

Europe’s new economic security strategy

The European Commission has taken a step forward, proposing a new economic security strategy that places the enhancement of competitiveness and the deepening of the single market as its foremost priority.

This strategy potentially offers a way to harmonize the differing preferences of Europe’s political and business spheres.

However, for this economic security strategy to flourish, there must be a consensus among member states and the corporate sector. Currently, there is a lack of such agreement, with the specter of China casting a shadow over Brussels’ identified economic security risks.

The strategy proposed by the commission seems to conflict with the business approaches of numerous European companies and their political allies.

European corporations, wary of the risks of dependence, fear missing out on China’s economic expansion and losing ground to both Chinese and American competitors.

De-risking economic ties with China appears to increase the risks to company competitiveness, creating a difficult balance to maintain.

The key to resolving this predicament might be learning from the successes of both China and the United States, which have caused some consternation in Europe. While European corporations are fixated on foreign markets, these countries have found success by focusing on domestic demand.

For instance, the U.S.’s Inflation Reduction Act’s success stems not from import restrictions, but from fostering an expectation of a booming, profitable market for green technologies at home. The resultant boom in American factory construction is a testament to this strategy.

China, traditionally relying on an export-led growth strategy, has also started utilizing its domestic market as a growth engine, particularly for sectors like electric vehicles.

The lessons from these two economic powerhouses serve as a reminder for Europe that its strength can also be found domestically.

The road to economic security

In the past, Europe has missed opportunities to stimulate domestic growth. A prime example is Europe’s loss of the lead in photovoltaic manufacturing in the 2000s, where the focus on external factors rather than fostering internal demand led to its downfall.

Europe must avoid a repeat of this mistake in the green tech sector. Calls to relax green regulations risk limiting the size of domestic markets for green-tech goods and services, thereby slowing supply capacity.

The European Union has been successful in creating such markets, and this is why it remains a leader in exporting many green tech industries. It is vital to remember that this success is rooted in its proactive market-shaping regulations.

Therefore, Europe’s path to economic security lies in amplifying domestic green tech demand. Companies that are assured of profiting from investment in their home markets will be less likely to oppose de-risking measures designed to reduce Europe’s dependency on external political choices.

For Europe, the pathway to economic security begins at home. Doubling down on enhancing domestic green tech demand will not only boost its economy but will also establish it as a powerhouse in the global market, thus ensuring economic security.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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