Eurozone lags behind US in economic disparity, calls grow for action, says Allianz report

"In the quarter-century since the euro was introduced, the economic gulf between the United States and the eurozone has almost tripled," the Allianz Trade report states. There's also a prominent discrepancy between the EU and the US concerning the market value growth of American businesses compared to their European equivalents. According to the report, the value of US businesses has almost tripled to 38 trillion dollars since 2007, while the value of their European counterparts has remained static.

The report proposes that the United States maintains an advantage over the European Union primarily because of two factors. The first is a comprehensive and fluid government debt market, enabling "the US government to spend money to emerge from a crisis." However, the EU provides significantly less fiscal flexibility due to the looming risk of national insolvency.

Energy costs are another key element. The report's authors note that business electricity bills in the United States are 32% lower than in France, 53% lower than in Spain, and 63% lower than in Germany. This distinctly benefits the United States over the EU. Additionally, they outperform the EU in the technology sector, and also hold the upper hand in favorable demographics.

Yet, the central issue related to the European Union seems to be that it "trips over its own shoelaces," as the report's authors express it. They attribute this chiefly to overbearing regulations and bureaucracies, which curb productivity growth.

Moreover, EU programmes are excessively complex and disorganized, which discourages the private sector from enhancing capital expenditure. This situation contrasts with the one prevailing in the US, according to the report.

On the brighter side, the authors of the report draw attention to two optimistic aspects of the Union: the drive towards a green economy and specific demographic indicators.

The EU is pioneering the green transformation, and the economies of the eurozone have considerably lower total and per capita CO2 emissions than the US.(...) The green economy will create more jobs to counterbalance potential deindustrialization in declining sectors, according to the report.

In terms of demographic indicators, the report underscores that the European Union surpasses the United States in life expectancy, influenced by healthcare accessibility, substance abuse, and income distribution inequality. These factors also carry substantial importance for long-term economic success, the authors underline.

So, what actions should the EU take? Above all, the report states that the European Parliament urgently needs to eliminate barriers to productivity growth. Accordingly, the EU must cut down bureaucracy and excessive regulations and revisit efforts to enhance the union of capital markets.

Furthermore, the Union must ensure economic congruity and complementarity among member states. "This would decrease damaging competition for subsidies between countries and intensify location-based competition," the report suggests.