top of page

French President Declares "Europe in Mortal Danger"

Emerging market investors are keeping a watchful eye on Europe's health. This continent, a critical source of $150 billion in annual remittances for developing economies, faces a potential decline according to French President Emmanuel Macron. Macron warns of Europe's "mortal danger" and highlights several factors that could significantly impact emerging markets. The impact of Europe's decline on emerging markets is important to understand as it shapes investment risks in emerging markets due to European instability.

Macron criticizes Europe for outsourcing its production to China, with European manufacturing outsourcing to China increasing from 22% in 2000 to over 35% by 2020, according to UNCTAD data. Europe's over-reliance on Russia for energy and the U.S. for security also poses a significant challenge. The French President also points to Europe's self-inflicted wounds, including high taxes in the UK driving away wealthy individuals and the continent's transformation into a welfare state. In some European countries, citizens are better off on welfare than engaging in innovative and creative endeavors. Cultural decay is another reason for Europe's decline, as seen in the decrease in global exports of movies, series, and music from the UK. The European Audiovisual Observatory reports a 50% decline in European international film production over the past decade.

Europe is in "mortal danger," according to French President Emmanuel Macron. This situation has significant implications for emerging markets, as Europe is a major consumer of products and services produced in these economies. The impact of Europe's decline on emerging markets is difficult to overstate.

Historically, Europe has been a reliable source for residents of poorer countries to generate money to send back home in the form of remittances. In 2021 alone, $150 billion left Europe in remittances to emerging markets.

What other rich countries and regions will be as generous to the emerging economies and peoples? France, in particular, has many financial entanglements in Africa, and while many have been detrimental to African nations, the benefits that have accrued to Africans from France's involvement are rarely discussed.

In his interview with The Economist, Macron outlines several causes of Europe's decline. Ironically, most are caused by outsourcing too much to poorer countries, with Europeans opting for ease, comfort, and lower prices over self-reliance.

Macron's Key Grievances

Macron criticizes Europe for voluntarily outsourcing its production to China. UNCTAD data shows that European manufacturing outsourcing to China increased from 22% in 2000 to over 35% by 2020.

Europe relies too much on Russia for energy. Before the Ukraine crisis, Europe imported approximately 40% of its natural gas from Russia.

Security reliance on the U.S. is another concern for Macron. 27 European countries depend on a distant nation across the Atlantic to secure their borders and keep their people safe. Remarkably, the U.S. accounts for 70% of NATO's defense budget. Ukraine is a major contributor to Europe's food supplies, while Russia produces 300% more artillery shells than all of the EU combined.

When Germany is excluded from European statistics, Macron argues, it becomes evident how significantly Europe has declined. The continent suffers from a lack of innovation, weak leadership, and is mired in cultural and economic stagnation. He is particularly troubled by the fact that virtually all of Europe's problems are self-inflicted.

Europe's Self-Inflicted Wounds

Macron points to the UK, which has alienated wealthy individuals with a 45% tax rate and requirements for taxing income not domiciled in the UK.

Europe has become a welfare state with some European governments spending more than 30% of GDP on welfare benefits. In most countries in Europe citizens are better off on welfare than being innovative and creative. The European Center for the Development of Vocational Training supports the assertions having previously noted that unemployment benefits often exceed the minimum wage in Europe which discourages workforce participation.

The embrace of socialism has not helped and has ensured that Europeans largely are locked into a caste forever with little to no hope of escape.

Europe's Cultural Decay

Another reason "Europe could die", according to Macron, is cultural rot and decay. The UK, once a prolific producer of globally consumed movies, series, and music, now finds its most notable export to be the English Premier League. The European Audiovisual Observatory reports a 50% decline in European international film production over the past decade.

The ongoing decline in Europe presents a formidable challenge, yet its implications for emerging markets are profound, and investors should take note. A revitalized Europe is in the best interest of all parties involved, but achieving this will require tough decisions and significant changes. Investment risks in the emerging markets will continue to destabilize so long as European shakiness persists. Are Europeans and their governments up to the task?




Subscribe to the Newsletter

Subscribe to the newsletter

No Spam. Cancel Anytime. It's FREE!


bottom of page