Europe's Postwar Growth Model Weakening Under Global Trade Pressures

European Central Bank President Christine Lagarde stated that Europe's postwar growth model is weakening and unlikely to return to its former state. The model relied on global trade expansion, an industrial sector with access to cheap energy, and a stable international order supported by the U.S. security umbrella. However, these factors are now weakening, according to Lagarde.

Last year alone, more than 2,500 trade restrictions were introduced worldwide, which is adding pressure on the European economy. The ECB president also pointed out that the U.S. stepping back from its leading role in guaranteeing the security of its Western allies has led to growing security threats near Europe's borders.

Lagarde emphasized that economic dependencies can become a tool for exerting pressure, and a diminished sense of security affects investment decisions. She noted that companies invest less when they perceive their capital as less secure, which impacts production and consumption.