"Lagarde argued that Europe was vulnerable because of a dependency on third countries for our security and the supply of critical raw materials. She cited China's control of the supply of rare earth metals that are crucial in electric motors and wind turbines, as well as the choke point of power chips made by Nexperia in China that threatened to shut down production across the global car industry."
"Policymakers had instead allowed its weaknesses to erode growth quietly, as each new shock nudges us onto a slightly lower trajectory. Our internal market has stood still, especially in the areas that will shape future growth, like digital technology and artificial intelligence, as well as the areas that will finance it, such as capital markets, she said."
"Europe also faced a vicious circle of its own savers allocating money to US stocks, helping the American economy to advance faster than the EU and leaving stagnating productivity at home and growing dependence on others, she said. Lagarde did highlight some European strengths as well, including a resilient labour market, increasing digital investment, and government spending, particularly on defence in response to Russia's invasion of Ukraine, that has counteracted economi"
The EU's heavy reliance on international trade and third-country suppliers has increased vulnerability as major partners adopt protectionist measures and global supply dominance shifts. China controls critical inputs like rare earth metals and certain power chips, creating single points of failure for key industries such as electric motors, wind turbines, and car manufacturing. Policymakers have allowed structural weaknesses to persist, leaving the internal market stagnant in digital, AI, and capital-market development. Domestic savers investing in US assets has further widened growth and productivity gaps. Some strengths include a resilient labour market, rising digital investment, and higher government defence spending.
Read at www.theguardian.com
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