On 29 January, Monaco played host to an exceptional conference organised by Edmond de Rothschild Monaco, featuring Mathilde Lemoine, Chief Economist of the Edmond de Rothschild Group, and Sébastien Cavernes, Head of Investment at Edmond de Rothschild Monaco. At the event, Mathilde Lemoine highlighted the prospects and challenges specific to Europe and the United States.
You highlighted the exceptional economic performance of the United States in 2024. What factors explain this dynamism?
Since Donald Trump's first term in office, the United States has adopted an economic policy based on growth and sovereignty. This includes ambitious measures such as the Inflation Reduction Act (IRA), the CHIPS Act, and massive tax cuts, all of which have massively supported business investment.
The result? An increase in productivity, with an annual rate of 1.7% compared with 1.3% before the pandemic. This economic policy choice, shared by Republicans and Democrats alike, has increased the growth potential of the United States. By 2024, it had achieved impressive growth of 2.8%, while the eurozone was struggling at 0.6%.
What lessons could Europe learn from this American strategy?
Europe suffers from a lack of pragmatism in its economic choices. While the United States is investing massively, the eurozone remains locked into restrictive budgetary policies aimed at reducing deficits, while favouring pension spending. Since then, private investment supported by tax credits has grown by 19% in the United States, whereas it has fallen by 14% in the Eurozone!
What's more, Europe lacks a unified policy to reduce the cost of energy for its businesses, which is affecting their competitiveness. For example, gas prices are still five times higher in Europe than in the United States, forcing sectors such as chemicals and food processing to relocate their activities across the Atlantic.
Trade tensions between the United States and Europe seem to be intensifying. What are the implications of this?
Donald Trump has already described Europe as ‘mini-China’ because of its growing trade deficit with the United States, which now stands at 235 billion dollars (according to figures from the Bureau of Economic Analysis). The sectors most at risk are cars, medicines, boats, luxury goods and agriculture, particularly in France, Germany and Italy.
This trade war is creating profound uncertainty, as companies are reluctant to invest in the face of constant threats of customs duties. This is slowing European growth and widening its gap with the United States.
What risks do you see for Europe in the short term?
Europe is caught in a vice between two powers:
- The United States, with its attractive energy costs and innovation infrastructure.
- China, which dominates the technologies needed for the energy transition, such as electric batteries and solar panels.
Without a coherent strategy, Europe risks becoming dependent on imports, which would weaken its economic and national sovereignty. In addition, budget restrictions are limiting its ability to support business investment in key sectors, putting it further behind the major powers. Finally, it is neglecting human capital.
Nevertheless, China continues to face challenges...
China remains a key player in the world, but its model is under pressure. It has to deal with structural problems, such as an ageing population and growing geopolitical tensions, particularly with the United States.
Despite all this, China is compensating by focusing on its exports, particularly to Europe, in sectors linked to the energy transition (electric vehicles, batteries, solar panels). While the United States is trying to reduce its imports from China, China is turning to European markets to maintain its pace.
At the same time, Beijing continues to invest massively in national infrastructure and technology, two essential pillars of its sovereignty. Finally, the Chinese government is developing a strategy of circumventing European customs barriers, notably through direct investment in local factories in Eastern Europe, such as Hungary.
So has Europe become more dependent on China?
Particularly for the technologies needed for the energy transition. For example, the share of European imports from China has risen by three points since 2017, led by products such as batteries and components for solar panels.
This dependence is doubly problematic:
- It weakens European technological sovereignty.
- It creates vulnerability to potential trade disruptions, such as Chinese restrictions or European tariffs.
Europe must therefore rapidly invest in its own industrial infrastructures to reduce this dependence, but this requires clear strategic choices and more ambitious budgetary policies.
Artificial intelligence is at the heart of global economic developments. What role does it play in this competition between the major powers?
Artificial intelligence (AI) is one of the key drivers of global competitiveness. The United States, with its technological giants, and China, thanks to colossal public investment, largely dominate this sector.
Europe is lagging far behind. While some initiatives are emerging, such as technology hubs in France and Germany, they remain insufficient in the face of American and Chinese advances. For example, Europe has not yet mastered the critical infrastructures, such as semi-conductors and data centres, that are essential for developing AI.
What's more, AI consumes a lot of energy. Europe's high energy costs are holding back companies in this field, making them less competitive with their American and Asian counterparts. If Europe wants to stay in the race, it will not only have to invest in AI technologies, but also reduce energy costs and provide more support for research.
What are Europe's priorities in the face of these challenges?
Europe must establish clear priorities if it is to remain competitive in this new bipolar world dominated by the United States and China. I see three key areas:
- Reducing the cost of energy for businesses, in order to improve their competitiveness and their ability to innovate.
- Invest massively in research and the technology industry, by supporting strategic European projects on AI and the energy transition.
- Strengthening social cohesion, in particular through training programmes to better integrate employees into a rapidly changing technological world.
Without these actions, Europe runs the risk of remaining a spectator in global competition, to the detriment of its economic sovereignty and its values.
How do you see global growth dynamics developing in 2025?
I'm predicting global growth of 2.5% in 2025, slightly lower than in 2024. The United States will continue to lead the way with a forecast of 2.1%, supported by a high budget deficit and falling short-term interest rates.
By contrast, the eurozone is set to lag behind, with growth expected to be just 0.6%. This lag is exacerbated by inappropriate budgetary choices and insufficient energy competitiveness. China, on the other hand, is expected to record growth of 4.7%, still driven by its exports, particularly to Europe in sectors linked to the energy transition.
