The European Union faces a significant economic challenge as it seeks to narrow the GDP gap with the United States. Eurostat estimates the EU's GDP at €18.8 trillion in 2025, roughly $21.3 trillion, which is still 45 percent smaller than America's $30.8 trillion economy. Even after adjusting for purchasing power, the U.S. GDP per person remains 38 percent higher than the EU average. This disparity highlights the need for Europe to improve its economic conditions to foster business growth and innovation.
Fragmented markets and limited access to growth capital are key obstacles for European businesses. While firm creation in Europe is comparable to the U.S., expanding into larger, more productive enterprises is much harder. The EU must create a more integrated market that allows companies to operate across borders with ease, reducing administrative costs and improving infrastructure.
Strengthening the transatlantic partnership is crucial for both economies. Two-way goods trade between the EU and the U.S. reached €911 billion in 2025, with mutual investment positions standing at €4.8 trillion in 2024. Trade policy should focus on value creation, competitive pressure, and investment rather than simply chasing trade surpluses. Cooperation on product testing, digital customs documentation, and investment in areas like energy infrastructure and artificial intelligence can further enhance this relationship.
Europe's growth strategy should prioritize domestic demand and productivity while attracting international capital. The ECB notes that euro area households hold a substantial share of financial assets in deposits, indicating a need for more integrated capital markets. By offering suitable, transparent financing options and fostering a business-friendly environment, Europe can sustain its social ambitions and close the economic gap with the U.S.