1、Europe must tackle its growth problem Creative destruction to save Europes uniquenessIn theory,at least,there is a consensus:Europes economy must grow and grow fast.Too much is at stake otherwise.The continents prosperity,its high quality of life,and above all,its security and defense,which are cons

2、uming ever larger sums,all depend on it.At the same time,without robust security and defense,Europes economy remains at great risk.Faced with a host of challenges,Germanys new government has embarked on a radical shift in fiscal policy.A new debt rule-exempt infrastructure fund has been set up,aimin

3、g to allocate EUR 500 billion into the countrys ailing infrastructure over the next decade.This is just the beginning,however.The constitutionally enshrined debt brake is set to be loosened,with annual defense spending above 1%of GDP excluded from its constraints and an easing of the particularly st

4、rict debt rules for Germanys regional states.If the initiative proceeds to plan,the new package has the potential to boost economic growth by more than EUR 80 billion as early as this year.This estimate does not account for the possibility of a positive confidence shock,which could have a significan

5、t impact on both consumers and businesses,generating positive ripple effects throughout Europe.Nonetheless,the fundamental question remains:will this substantial investment program genuinely enhance productivity and competitiveness across the continent?Its success will ultimately depend on whether G

6、ermany-and the rest of Europe follows through on long-overdue structural reforms.APRIL 2025RBI Quarterly No.1/25 Radical ReinventionAUTHORSDAVID BORNSenior ManagerCHRISTIAN GSCHWENDTNERSenior ExpertCHRISTIAN KRYSSenior ExpertAgainst this backdrop,we undertake a fundamental analysis of Europes growth