Throughout a lot of Europe, the engines of financial progress are sputtering. In its newest international outlook, the Worldwide Financial Fund (IMF) sharply downgraded its forecasts for the UK and Europe, warning that the continent faces persistent financial bumps within the street.
Globally, the World Financial institution just lately stated this decade is prone to be the weakest for progress for the reason that Sixties. “Outside of Asia, the developing world is becoming a development-free zone,” the financial institution’s chief economist warned.
The UK economic system went into reverse in April 2025, shrinking by 0.3%. The announcement got here a day after the UK chancellor, Rachel Reeves, delivered her spending overview to the Home of Commons with a speech that talked about the phrase “growth” 9 instances – together with promising “a Growth Mission Fund to expedite local projects that are important for growth”:
I stated that we wished progress in all components of Britain – and, Mr Speaker, I meant it.
Throughout Europe, a long-term financial forecast to 2040 predicted annual progress of simply 0.9% over the following 15 years – down from 1.3% within the decade earlier than COVID. And this forecast was in December 2024, earlier than Donald Trump’s aggressive tariff insurance policies had reignited commerce tensions between the US and Europe (and just about in all places else on the planet).
Even earlier than Trump’s tariffs, the fact was clear to many financial specialists. “Europe’s tragedy”, as one columnist put it, is that it’s “deeply uncompetitive, with poor productivity, lagging in technology and AI, and suffering from regulatory overload”. In his 2024 report on European (un)competitiveness, Mario Draghi – former president of the European Central Financial institution (after which, briefly, Italy’s prime minister) – warned that with out radical coverage overhauls and funding, Europe faces “a slow agony” of relative decline.
Thus far, the standard response of electorates has been in charge the policymakers and exchange their governments on the first alternative. In the meantime, politicians of all shades whisper candy nothings about how they alone know find out how to discover new sources of progress – mostly, from the magic AI tree. As a result of progress, with its extensively accepted energy to ship higher productiveness and prosperity, stays a key pillar in European politics, upheld by all events because the benchmark of credibility, progress and management.
However what if the sobering fact is that progress is not reliably attainable – throughout Europe not less than? Not simply this yr or this decade however, in any significant sense, ever?
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For a continent like Europe – with restricted land and no extra empires to take advantage of, ageing populations, main local weather considerations and electorates demanding ever-stricter boundaries to immigration – the circumstances that when underpinned regular financial growth might not exist. And within the UK greater than most European international locations, these points are compounded by excessive ranges of long-term illness, early retirement and financial inactivity amongst working-age adults.
Because the European Parliament prompt again in 2023, the time could also be coming once we are compelled to look “beyond growth” – not as a result of we need to, however as a result of there isn’t a different lifelike possibility for a lot of European nations.
However will the general public ever settle for this new actuality? As an skilled in how public coverage can be utilized to remodel economies and societies, my query shouldn’t be whether or not a world with out progress is morally superior or extra sustainable (although it could be each). Fairly, I’m exploring if it’s ever attainable for political events to be sincere a few “post-growth world” and nonetheless get elected – or will voters merely flip to the following chief who guarantees they know the key of perpetual progress, nevertheless sketchy the proof?
Which manner is the proper manner?
Pixelvario/Shutterstock
What drives progress?
To know why Europe specifically is having such a tough time producing financial progress, first we have to perceive what drives it – and why some international locations are higher positioned than others when it comes to productiveness (the flexibility to maintain their economic system rising).
Economists have a comparatively simple reply. At its core, progress comes from two elements: labour and capital (equipment, know-how and the like). So, to your economic system to develop, you both want extra individuals working (to make extra stuff), or the identical quantity of staff must turn out to be extra productive – through the use of higher machines, instruments and applied sciences.
The primary challenge is labour. Europe’s working-age inhabitants is, for probably the most half, shrinking quick. Because of many years of declining delivery charges (linked with rising life expectancy and better incomes), together with growing resistance to immigration, many European international locations face declines of their working inhabitants. “”). Rural and concrete areas of Europe alike are experiencing structural ageing and depopulation traits that make conventional financial progress ever more durable to attain.
Traditionally, inhabitants progress has gone hand-in-hand with financial growth. Within the postwar years, international locations equivalent to France, Germany and the UK skilled booming delivery charges and main waves of immigration. That increasing labour power fuelled industrial manufacturing, shopper demand and financial progress.
Why does financial progress matter? Video: Financial institution of England.
Ageing populations not solely cut back the dimensions of the lively labour power, they place extra stress on well being and different public companies, in addition to pension programs. Some areas have tried to compensate with extra liberal migration insurance policies, however public resistance to immigration is robust – mirrored in elevated assist for rightwing and populist events that advocate for stricter immigration controls.
Whereas the UK’s median age is now over 40, it has a birthrate benefit over international locations equivalent to Germany and Italy, thanks largely to the inflow of immigrants from its former colonies within the second half of the twentieth century. However whether or not this interprets into significant and sustainable progress relies upon closely on labour market participation and the standard of funding – significantly in productivity-enhancing sectors like inexperienced know-how, infrastructure and training – all of which stay unsure.
If Europe can’t depend on extra staff, then to attain progress, its present staff should turn out to be extra productive. And right here, we arrive on the second half of the equation: capital. The same old hope is that investments in new applied sciences – significantly AI because it drives a brand new wave of automation – will make up the distinction.
In January, the UK’s prime minister, Keir Starmer, referred to as AI “the defining opportunity of our generation” whereas asserting he had agreed to take ahead all 50 suggestions set out in an impartial AI motion plan. To not be outdone, the European Fee unveiled its AI continent motion plan in April.
However Europe can be falling behind within the international race to harness the financial potential of AI, trailing each the US and China. The US, specifically, has surged forward in growing and deploying AI instruments throughout sectors equivalent to healthcare, finance, manufacturing and logistics, whereas China has leveraged its large state-supported, open-source industrial coverage to scale its digital economic system.
Keir Starmer publicizes the UK’s AI motion plan. Video: BBC.
Regardless of the EU’s concerted efforts to reinforce its digital competitiveness, a 2024 McKinsey report discovered that US companies invested round €700 billion extra in capital expenditure and R&D, in 2022 alone than their European counterparts, underscoring the continent’s funding hole. And the place AI is adopted, it tends to pay attention good points in a number of famous person corporations or cities.
In actual fact, this disconnect between firm-level innovation and nationwide progress is likely one of the defining options of the present period. Tech clusters in cities like Paris, Amsterdam and Stockholm might generate unicorn startups and record-breaking valuations, however they’re not sufficient to maneuver the needle on GDP progress throughout Europe as an entire. The good points are sometimes too slim, the spillovers too weak and the social returns too uneven.
But admitting this publicly stays politically taboo. Can any European chief look their residents within the eye and say: “We’re living in a post-growth world”? Or somewhat, can they are saying it and nonetheless hope to win one other election?
The human want for progress
To be human is to develop – bodily, psychologically, financially; within the richness of {our relationships}, creativeness and ambitions. Few individuals can be proud of the prospect of being consigned to do the identical job for a similar cash for the remainder of their lives – because the collapse of the Soviet Union demonstrated. Which makes the prospect of promoting a post-growth future to individuals sound nearly inhuman.
Even those that care little about cash and success normally try to create higher futures for themselves, their households and communities. When that sense of alternative and ahead movement is absent or pissed off, it may well result in malaise, disillusionment and in excessive instances, despair.
The well being penalties of long-term financial decline are more and more described as “diseases of despair” – rising charges of suicide, substance abuse and alcohol-related deaths concentrated in struggling communities. Recessions reliably gas psychological misery and demand for psychological healthcare, as seen in the course of the eurozone disaster when Greece skilled surging ranges of despair and declining self-rated well being, significantly among the many unemployed – with job loss, insecurity and austerity all contributing to emotional struggling and social fragmentation.
These traits don’t simply have an effect on the weak; even those that seem comparatively safe typically expertise “anticipatory anxiety” – a persistent concern of shedding their foothold and slipping into instability. In communities, each rural and concrete, which might be wrestling with long-term decline, “left-behind” residents typically describe a deep sense of abandonment by governments and society extra typically – prompting requires restoration methods that tackle despair not merely as a psychological well being challenge, however as a wider financial and social situation.
The idea in alternative and upward mobility – lengthy embodied in US tradition by “the American dream” – has traditionally served as a robust psychological buffer, fostering resilience and goal even amid systemic boundaries. Nevertheless, as inequality widens and whereas profession alternatives for a lot of seem to slim, analysis exhibits the hole between aspiration and actuality can result in disillusionment, power stress and elevated psychological misery – significantly amongst marginalised teams. These emotions are solely intensified within the age of social media, the place fixed publicity to curated success tales fuels social comparability and deepens the sense of falling behind.
For youthful individuals within the UK and plenty of components of Europe, the truth that a lot capital is tied up in housing means alternative relies upon much less on effort or advantage and extra on whether or not their dad and mom personal property – that means they may cross a few of its worth all the way down to their youngsters.
‘Deaths of Despair and the Future of Capitalism’, a dialogue hosted by LSE On-line.
Stagnation additionally manifests in additional refined however no much less damaging methods. Take infrastructure. In lots of international locations, the true price of flatlining progress has been absorbed not by means of dramatic collapse however quiet decay.
Throughout the UK, greater than 1.5 million youngsters are studying in crumbling faculty buildings, with some compelled into makeshift lecture rooms for years after being evacuated as a result of security considerations. In healthcare, the whole NHS restore backlog has reached £13.8 billion, resulting in a whole bunch of crucial incidents – from leaking roofs to collapsing ceilings – and the lack of very important medical time.
In the meantime, uncared for authorities buildings throughout the nation are affecting every thing from jail security to courtroom entry, with hundreds of instances disrupted as a result of structural failures and fireplace security dangers. These are usually not headlines however lived realities – the hidden toll of underinvestment, quietly hollowing out the state behind a veneer of performance.
With out financial progress, governments face a stark dilemma: to boost revenues by means of increased taxes, or make additional rounds of spending cuts. Both path has deep social and political implications – particularly for inequality. The query turns into not simply find out how to steadiness the books however how to take action pretty – and whether or not the general public may assist a post-growth agenda framed explicitly round decreasing inequality, even when it additionally means paying extra taxes.
In actual fact, public attitudes counsel there’s already widespread assist for decreasing inequality. In response to the Equality Belief, 76% of UK adults agree that giant wealth gaps give some individuals an excessive amount of political energy.
Analysis by the Sutton Belief finds youthful individuals particularly attuned to those disparities: solely 21% of 18 to 24-year-olds imagine everybody has the identical likelihood to succeed and 57% say it’s more durable for his or her era to get forward. Most imagine that coming from a rich household (75%) and realizing the proper individuals (84%) are key to getting on in life.
In a post-growth world, increased taxes wouldn’t solely imply wealthier people and companies contributing a comparatively higher share, however the wider public shifting consumption patterns, spending much less on personal items and extra collectively by means of the state. However the current instance of France exhibits how difficult this tightope is to stroll.
In September 2024, its former prime minister, Michel Barnier, signalled plans for focused tax will increase on the rich, arguing these had been important to stabilise the nation’s strained public funds. Whereas politically delicate, his proposals for tax will increase on rich people and huge corporations initially handed with out widespread public unrest or protests.
Nevertheless, his broader austerity bundle – encompassing €40 billion (£34.5 billion) in spending cuts alongside €20 billion in tax hikes – drew vocal opposition from each left‑wing lawmakers and the far proper, and contributed to parliament toppling his minority authorities in December 2024.
Within the UK, the stress on authorities funds (heightened each by Brexit and COVID) has seen a mix of “stealth” tax rises – notably, the continued freeze on earnings tax thresholds, which quietly drags extra earners into increased tax bands – and extra seen will increase, such because the rise in employer Nationwide Insurance coverage contributions. On the similar time, the UK authorities moved to chop advantages in its spring assertion, growing monetary stress on lower-income households.
Such measures certainly mark the early indicators of a deeper monetary reckoning that post-growth realities will power into the open: find out how to maintain public companies when conventional assumptions about financial growth can not be relied upon.
For the normal events, the political warmth is on. Areas most left behind by structural financial shifts are more and more drawn to populist and anti-establishment actions. Electoral outcomes have proven a major shift, with far-right events equivalent to France’s Nationwide Rally and Germany’s Different for Germany (AfD) making substantial good points within the 2024 European parliament elections, reflecting a broader pattern of rising assist for populist and anti-establishment events throughout the continent.
An illustration in Berlin requires a ban on Germany’s AfD get together, Might 2025.
Filip Singer/EPA-EFE
Voters are expressing rising dissatisfaction not solely with the economic system, however democracy itself. This sentiment has manifested by means of declining belief in political establishments, as evidenced by a Forsa survey in Germany the place solely 16% of respondents expressed confidence of their authorities and 54% indicated they didn’t belief any get together to resolve the nation’s issues.
This brings us to the central dilemma: can any European politician efficiently lead a nationwide dialog which admits the financial assumptions of the previous not maintain? Or is trying such honesty in politics inevitably a path to self-destruction, irrespective of how urgently the dialog is required?
Going through as much as a brand new financial actuality
For a lot of the postwar period, financial life in superior democracies has rested on a set of acquainted expectations: that arduous work would translate into rising incomes, that dwelling possession can be broadly attainable and that every era would surpass the prosperity of the one earlier than it.
Nevertheless, a rising physique of proof suggests these pillars of financial life are eroding. Youthful generations are already struggling to match their dad and mom’ earnings, with decrease charges of dwelling possession and higher monetary precarity changing into the norm in lots of components of Europe.
Incomes for millennials and era Z have largely stagnated relative to earlier cohorts, at the same time as their dwelling prices – significantly for housing, training and healthcare – have risen sharply. Charges of intergenerational earnings mobility have slowed considerably throughout a lot of Europe and North America for the reason that Nineteen Seventies. Many younger individuals now face the prospect not simply of static dwelling requirements, however of downward mobility.
Successfully speaking the realities of a post-growth economic system – together with the necessity to account for future generations’ rising sense of alienation and declining religion in democracy – requires extra than simply sound coverage. It calls for a critical political effort to reframe expectations and rebuild belief.
Historical past exhibits that is generally attainable. When the Nationwide Well being Service was based in 1948, the UK authorities confronted fierce resistance from components of the medical career and considerations among the many public about price and state management. But Clement Attlee’s Labour authorities persevered, linking the creation of the NHS to the shared sacrifices of the conflict and a compelling ethical imaginative and prescient of common care.
Whereas taxes did rise to fund the service, the promise of a fairer, more healthy society helped safe enduring public assist – however admittedly, within the wake of the huge shock to the system that was the second world conflict.
In 1946, Prime Minister Clement Attlee requested the UK public to assist ‘renew Britain’. Video: British Pathé.
Psychological analysis affords additional perception into how such messages could be acquired. Individuals are extra receptive to alter when it’s framed not as loss however as contribution – to equity, to neighborhood, to shared resilience. This underlines why the speedy postwar interval was such a politically fruitful time to launch the NHS. The COVID pandemic briefly provided a way of unifying goal and the prospect to rethink the established order – however that window rapidly closed, leaving a lot of the previous buildings intact and largely unquestioned.
A society’s capacity to flourish with out significant nationwide progress – and its residents’ capability to stay content material and even hopeful within the absence of financial growth – finally relies on whether or not any political get together can credibly redefine success with out counting on guarantees of ever-increasing wealth and prosperity. And as a substitute, supply a believable narrative about methods to fulfill our very human wants for private growth and social enrichment on this new financial actuality.
The problem shall be not solely to seek out new financial fashions, however to construct new sources of collective that means. This second calls for not simply financial adaptation however a political and cultural reckoning.
If the concept of constructing this new consensus appears overly optimistic, research of the “spiral of silence” counsel that individuals typically underestimate how extensively their views are shared. A current report on local weather motion discovered that whereas most individuals supported stronger inexperienced insurance policies, they wrongly assumed they had been within the minority. Making shared values seen – and naming them – could be key to unlocking political momentum.
To this point, no mainstream European get together has dared articulate a imaginative and prescient of prosperity that doesn’t depend on reviving progress. However with democratic belief eroding, authoritarian populism on the rise and the local weather disaster accelerating, now could be the second to start that long-overdue dialog – if anybody is prepared to pay attention.
Welcome to Europe’s first ‘post-growth’ nation
I’m imagining a European nation in a decade’s time. One which not positions itself as a worldwide tech powerhouse or monetary centre, however the first main nation to declare itself a “post-growth nation”.
This shift didn’t come from idealism or ecological fervour, however from the exhausting actuality that after years of financial stagnation, demographic change and mounting environmental stress, the pursuit of financial progress not provided a reputable path ahead.
What adopted wasn’t a revolution, however a reckoning – a response to political chaos, collapsing public companies and widening inequality that sparked a broad coalition of youthful voters, local weather activists, disillusioned centrists and exhausted frontline staff to rally round a brand new, pragmatic imaginative and prescient for the longer term.
On the coronary heart of this motion was a shift in language and priorities, as the federal government moved away from guarantees of infinite financial growth and as a substitute dedicated to wellbeing, resilience and equality – aligning itself with a rising worldwide dialog about shifting past GDP, already gaining traction in European coverage circles and initiatives such because the EU-funded “post-growth deal”.
However this transformation was additionally the results of years of political drift and public disillusionment, finally catalysed by electoral reform that broke the two-party maintain and enabled a brand new alliance, formed by grassroots organisers, coverage innovators and a era able to reimagine what nationwide success may imply.
Taxes had been increased, significantly on land, wealth and carbon. However in return, public companies had been remodeled. Healthcare, training, transport, broadband and vitality had been assured as common rights, not privatised commodities. Work modified: the usual week was shortened to 30 hours and the state incentivised jobs in care, training, upkeep and ecological restoration. Folks had much less disposable earnings – however fewer prices, too.
Consumption patterns shifted. Hyper-consumption declined. Restore outlets and sharing platforms flourished. The housing market was restructured round long-term safety somewhat than speculative returns. A big-scale public housing programme changed buy-to-let funding because the dominant mannequin. Wealth inequality narrowed and cities started to densify as automotive use fell and public house was reclaimed.
For the youthful era, post-growth life was much less about climbing the earnings ladder and extra about stability, time and relationships. For older generations, there have been ensures: pensions remained, care programs had been rebuilt and housing protections had been strengthened. A brand new sense of intergenerational reciprocity emerged – not completely, however extra visibly than earlier than.
Politically, the transition had its dangers. There was backlash – a number of the rich left. However many stayed. And over time, the narrative shifted. This European nation started to be seen not as a laggard however as a laboratory for Twenty first-century governance – a spot the place ecological realism and social solidarity formed coverage, not simply quarterly targets.
The transition was uneven and never with out ache. Jobs had been misplaced in sectors not thought of sustainable. Provide chains had been restructured. Worldwide competitiveness suffered in some areas. However the political narrative – fastidiously crafted and extensively debated – made the case that resilience and fairness had been extra necessary than non permanent progress.
Whereas some international locations mocked it, others quietly started to review it. Some cities – particularly within the Nordics, Iberia and Benelux – adopted go well with, drawing from the rising physique of analysis on post-growth city planning and non-GDP-based prosperity metrics.
This was not a retreat from ambition however a redefinition of it. The shift was rooted in a rising physique of educational and coverage work arguing {that a} deliberate, democratic transition away from growth-centric fashions shouldn’t be solely appropriate with social progress however important to stopping environmental and societal collapse.
The nation’s post-growth transition helped it sidestep deeper political fragmentation by changing austerity with heavy funding in neighborhood resilience, care infrastructure and participatory democracy – from native budgeting to citizen-led planning. A brand new civic tradition took root: slower and extra deliberative however much less polarised, as politics shifted from summary guarantees of progress to open debates about real-world trade-offs.
Internationally, the nation traded some geopolitical energy for ethical authority, focusing much less on financial competitors and extra on international cooperation round local weather, tax justice and digital governance – incomes new relevance amongst smaller nations pursuing their very own post-growth paths.
So is that this all only a social and financial fantasy? Arguably, the true fantasy is believing that international locations in Europe – and the events that compete to run them – can proceed with their present insistence on “growth at all costs” (whether or not or not they really imagine it).
The choice – embracing a post-growth actuality – would supply the world one thing we haven’t seen in a very long time: honesty in politics, a dedication to decreasing inequality and a perception {that a} fairer, extra sustainable future remains to be attainable. Not as a result of it was simple, however as a result of it was the one possibility left.
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