A recent post by a prominent local economist has shed further light on the ongoing discussions on Europe’s declining economic dynamism, contrasting it with the booming entrepreneurial spirit and productivity of the United States.

Taking to LinkedIn, Seed Partner JP Fabri sought to give a “regulatory reality check” to Europe, a continent that he feels is “losing the race”.

He drew attention to three metrics that highlight the gravity of the issue.

First is the productivity gap between Europe (including the Eurozone and the UK) and the Uniteed States. This came to the fore after the Great Financial Crisis and widened significantly in the post-pandemic years.

The US has emerged as a productivity powerhouse, while Europe and the UK have stagnated.

This divergence is not just a short-term trend but a widening chasm that raises concerns about Europe’s global competitiveness. Where the US embraces technological advancements and operational efficiencies, Europe seems mired in a cycle of incrementalism.

Then there is Europe’s declining economic outlook, with an erosion in business and investor confidence “reflecting deeper structural issues,” according to Mr Fabri.

Businesses and investors alike are signalling apprehension, not only with regard to immediate economic woes but also highlighting a growing skepticism about Europe’s ability to adapt and thrive in a rapidly evolving global economy.

Third is the “entrepreneurial deficit”, as represented in a graphic of the “born-from-scratch” companies under 50 years old – showing that while the US is “a sea of innovation,” with firms like Google, Tesla and Nvidia now among the most valuable on Earth, the EU hardly has any that even come close.

The stark picture showcases the US’s capacity to nurture groundbreaking ventures, and on the other hand, Europe’s “obsession with over-regulation, bureaucratic hurdles and ‘playing safe’, which Mr Fabri argued have “throttled its ability to compete globally.”

He continued: “While the US fosters an entrepreneurial ecosystem, Europe’s frameworks strangle ambition before it scales. We cannot legislate our way to prosperity.”

The economist concluded by calling on Europe to make “bold reforms, risk-friendly policies, and incentives to unleash its potential.

Otherwise, he said, it will have to “accept its role as an economic backwater.”