Tradition and innovation, the foundations of the recovery of European industry

The economic and technological gap currently registered by the European Union compared to the US and China is obvious, but not impossible to overcome, according to a comprehensive analysis published by Politico, which states that, based on a clear strategy and smart investments, the European bloc could redefine its future, capitalizing on its cultural uniqueness and adaptability.

The cited source states that a key aspect of Europe's competitiveness is its cultural identity itself, which has transformed it into the world's leading tourist destination, and that in order to successfully compete with the US and China, decision-makers in Brussels could consider the example of Japan, a country that has focused on developing niche sectors and increasing the quality of life.

A quick decision is necessary because the cited analysis states that the EU's technological and economic gaps are becoming increasingly evident, in the context in which the US is a global leader in the adoption of digital technologies and the use of artificial intelligence, while the old continent has lagged behind. Politico journalists note that, for example, in the startup sector, bureaucratic obstacles and lack of access to financing are causing many young, creative, innovative entrepreneurs to move their ideas and operations to Silicon Valley.

That is why the economy recorded a growth of only 0.8% in the Eurozone, compared to 2.8% in the United States. In addition, Russia's invasion of Ukraine has exacerbated the energy crisis, and high energy prices are affecting the competitiveness of European industry. Germany, considered the continent's economic engine, is now facing fierce competition from China, especially in the electric vehicle industry, which has attracted massive layoffs announced by Volkswagen and Bosch, layoffs that reflect the difficulties facing the industrial sector.

As a result, the cited source states that, to overcome these challenges, Europe needs a clear strategy that combines its cultural heritage with innovation, and claims that the report recently presented by Mario Draghi - the former president of the European Central Bank - provides a roadmap for revitalizing the continent's economy, with a focus on the following points:

- Reforming the financial system by offering greater opportunities for startups regarding easier access to financing.

- Investment in research and development that will lead to increased competitiveness by supporting innovation in strategic areas such as artificial intelligence and digital technologies.

- Reviewing energy policies by reducing production costs to attract and retain industrial companies.

- Promoting European champions by creating companies strong enough to compete globally.

• Financing, the big problem for the recovery of European industry

The cited analysis states that these measures are not without challenges, especially since financing remains the main problem, in the context of budgetary constraints and the reluctance of some EU member states, including Germany, to accept joint loans. However, a concerted approach, based on collaboration and innovation, could change Europe's economic trajectory. However, this requires financing that would amount to almost 5% of the gross domestic product of the community bloc according to a report recently published by the European Central Bank, an amount that cannot be easily found, taking into account that the EU budget has reached a maximum of 1% of gross domestic product.

A Brussels diplomat told the source, speaking on condition of anonymity: "We clearly need funding for investment, for the Green Deal, for defence, etc., but this money is not currently foreseen and, in addition, the demographics are not looking good, the debt is growing, productivity is not great at European level."

Other proposals, such as redirecting funds from areas such as agriculture, which accounts for a third of the EU budget, are susceptible to veto rights. In these circumstances, the only solution would be for the EU to take out joint loans, but there is no European consensus on this measure.

The source also shows that, by looking at the example of Japan, Europe can learn to redefine its role in the global economy. Even though it is no longer the economic leader of the past, Japan has managed to remain relevant through niche sectors such as robotics and by promoting her culture. Similarly, Europe can continue to be a global force by integrating innovation with its traditional values.

As leaders in Brussels try to revive the economy, European citizens could find comfort in what they define best: a balanced lifestyle, a rich culture and a history that continues to inspire. This combination of tradition and modernity may be the key to a competitive and sustainable future for Europe.