Despite its potential, Europe’s economy is weak compared with other existing or emerging powers.
Structural reforms are progressing at a painfully slow pace. The widening gap between economic goals and dismal performance has adversely affected the credibility of European institutions.
The individual is burdened with relative high taxes – on average the top rate of income tax is around forty percent. The labour market is stagnant – young people in areas with too few suitable jobs may face years of precarious employment and uncertainty. Pressures to reduce budget deficits and put public accounts on a sustainable basis point to further cuts in public spending or tax increases – or both.
The slow reform of the welfare state and pensions system creates uncertainty about benefits, while increasing life expectancy means that more and more people may face a considerable drop in living standards in their last years.
