The nominal GDP of the United States is expected to reach $32.4 trillion in 2026, compared to just $23 trillion for the European Union, according to forecasts by the International Monetary Fund (IMF) (World Economic Outlook, Global Economy in Crosscurrents of War and Technology) .
This means that the combined economies of the 27 EU member states will account for just 71% of the US economy, confirming the widening economic gap between the two sides of the Atlantic.
Europe is losing ground due to lower productivity, demographic problems, greater dependence on international trade, exchange rate fluctuations and a series of economic and geopolitical crises.
A development that is considered inevitable
The current picture is completely predictable. The European Union has faced a series of shocks that have undermined its growth momentum and weakened the resilience of its economic model.
The 2008 global financial crisis, Brexit, the Covid-19 pandemic, energy crises, trade tariffs and the turmoil in the Middle East have put continuous pressure on the European economy, limiting growth and investment.
Productivity is the biggest problem
About 70% of the difference between the European Union and the United States in GDP per capita in purchasing power parity terms is due to the lower productivity of the European economy.
The US economy produces more value per worker, which translates into higher incomes, greater competitiveness and faster economic growth.
The euro and Brexit have weighed on the picture
Exchange rates have a significant impact on comparisons between economies. A depreciation of the euro automatically reduces the nominal GDP of the European Union in dollar terms, even if real output in factories and farms remains unchanged.
At the same time, the UK’s departure from the EU has deprived the European bloc of one of the world’s largest economies, reducing its overall economic weight.
Demographic developments also play a significant role, as an ageing population and slowing labour force growth limit Europe’s growth potential.
Dependence on international trade increases vulnerability
The European economy relies much more on international trade than the United States. As a result, tariffs, sanctions, trade restrictions, technical regulations and new industrial policies implemented by major economies disproportionately affect the European Union.
Access to foreign markets is a vital prerequisite for maintaining European growth, which makes the EU more exposed to international turmoil.
Why does the US need a strong Europe?
Despite the widening gap, the United States still has an interest in maintaining an economically stable Europe.
The European Union remains one of Washington’s most important trading and investment partners, while the continent’s economic stability is considered crucial for the overall balance of the global economic system.
However, IMF data shows that the gap between the two largest Western financial centers continues to grow, intensifying concerns about Europe’s long-term competitiveness vis-à-vis the United States.
