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Europe’s economic growth seems set to become a prominent topic in the political debate in the coming years.
One might think that we should always debate economic growth. In a sense, perhaps we always will. But it cannot be denied that we have debated the green transition and climate goals more than pure growth over the past decade.
It was of course not sustainable in the long term to neglect growth. Because while the EU must do its part in the necessary reduction of carbon dioxide emissions, the EU, and Europe in general, must also remain economically strong. Of course, it is possible to combine both goals to some extent. Growth can largely be achieved by developing new environmentally friendly technology. But we may not be quite there yet. We cannot rely solely on the dynamic effects expected to arise from the green transition. Rather, some examples in Sweden – where the much-loved new battery factory Northvolt went bankrupt – show that it is not possible to force the development of new industry. Change should come organically.
That is why Europe needs to become more realistic about growth. We cannot yet steer all production away from fossil fuels. We may also not be able to demand that the European car industry stop producing cars with combustion engines by 2035. Electrification will certainly become a reality. And it is already underway. But the economic and industrial reality must first create the conditions for electrification.
Perhaps we are currently seeing two signs in the times that growth and economic development are being attributed their own importance and not just a secondary one in relation to climate goals and the green transition.
The security policy document that the US administration recently presented and to which many in Europe reacted strongly is very much about growth and economic influence. The US will never be able to maintain its lead over China, the document emphasizes, unless the US continues to be an economic power whose strength is based on growth and trade. Even when it comes to the discussion about Europe – and this is where many Europeans have reacted strongly to the writings in the document – it is emphasized that growth is a prerequisite for a continued strong and confident Western Europe.
It is obvious that the Trump administration does not appreciate the role of the EU in modern Europe. The EU is described as a brake pad on European growth. The EU, according to the authors of the document and Donald Trump himself of course, is hampering European growth by over-regulating industry. Here, less consideration is needed for the environment and climate, they argue, and the EU should not use its power to hold back innovation and industry.
We can think what we want about Trump’s attitude towards the EU, but the fact is that we are currently seeing a change of attitude in Brussels when it comes to climate goals and regulations. There is talk of a “stop the clock” strategy where certain measures that have been decided to drive climate and sustainability work are simply postponed. And this is because companies and industries do not have the means and the opportunity to realize the EU’s previously so ambitious plans. Here, an economic reality comes in that forces EU countries to take what many would call a more realistic approach to transition and climate goals.
Another sign is the program statement that the four parties that have governed Sweden for just over three years recently presented ahead of the next parliamentary election in 2026. The last election, in 2022, focused on immigration, crime and fuel prices. And major reforms have taken place in these areas. In addition, the Swedish government, just like governments in other European countries, has had to devote a lot of energy in recent years to combating the very troublesome inflation. This has made it difficult for the Swedish government to implement economic reforms because the government has been afraid of fueling inflation. The economy needed to be slowed down.
But now inflation has been defeated. Sweden has a new migration and crime policy. And that is why the center-right government that governs Sweden together with the support party, the Sweden Democrats, is interested in talking about growth again. And now they are doing it in a more realistic way. It is no longer all about green transitions and new industry, but the economy and growth have acquired their own value. And growth seems to be becoming an election issue. The left and the right do not fully agree on how growth can best be promoted.