Europe’s Share of the Global Economy Continues to Shrink

ECONOMYEurope’s Share of the Global Economy Continues to Shrink

Although the European Union remains the world’s second-largest economy after the United States, its growth is far slower than that of China, India, or Brazil. Other indicators also suggest that Europe’s position on the global stage — both economically and politically — is weakening. Tensions with the United States under President Donald Trump further complicate matters. According to Jan Truszczyński, former Polish ambassador to the EU, Europe needs stable transatlantic relations and greater internal unity on key issues. However, the rise of eurosceptic parties across member states poses a growing challenge.

“The European Union remains one of the major players on the global stage, but collectively we matter less and less. This process will inevitably deepen, as several other global actors — such as India, Indonesia, or Brazil — are developing faster and catching up,” says Jan Truszczyński, former Polish ambassador to the EU and chief negotiator of Poland’s EU accession, in an interview with Newseria.


Europe’s shrinking global share

According to the World Bank, global GDP in 2024 totaled $111.25 trillion, of which the EU accounted for $19.4 trillion — or 18.29% of the global economy. For comparison, the United States contributed $29 trillion (27.49%), while China generated $18.7 trillion (17.6%). Data from Eurostat show that between 2005 and 2024, the EU’s average annual growth rate was 1.3%, and 1.1% in the euro area.

“In terms of our share in global output, trade, and investment, we’re declining rather than growing. This doesn’t mean we’ll vanish from the map, but we must accept that the world is changing — and not necessarily in our favor. Power increasingly dominates over principles, and international law, once our strength, is losing influence. We have to adapt to this reality,” notes Truszczyński.


Transatlantic friction under Trump

The shifting balance is particularly visible in EU–US relations, especially since Donald Trump took office. Trade disputes over tariffs have persisted throughout his term.

“Relations with the United States will continue to be challenging. We have temporarily achieved a relatively favorable framework agreement for trade, but that’s not the end of the road — the details are what matter, and they’re the hardest part. It’s not yet a stable framework on which investors or exporters can confidently rely,” explains the former ambassador.

On July 27, European Commission President Ursula von der Leyen and US President Donald Trump reached a political agreement establishing a framework for fair, balanced, and mutually beneficial transatlantic trade and investment. The deal set a maximum 15% tariff on most EU exports to the US, including strategic sectors such as automotive, pharmaceuticals, and semiconductors.

“Uncertainty remains — what we’ve achieved today may prove fragile within months. That’s why we must act collectively and strengthen our unity. If we fail to do so, our position will weaken even further,” Truszczyński warns.


Defence cooperation and European security

The benefits of working together are evident in the defence and security sectors, where EU countries have increasingly coordinated their actions. According to the European Defence Agency (EDA) report “Defence Data 2024–2025”, collective initiatives have reduced unit procurement costs, increased interoperability, and limited duplication among member states. Analysts say prioritizing joint EU defence procurement strengthens Europe’s industrial base, promotes standardization, and improves operational efficiency.

“In recent months, most EU countries have drawn lessons from global developments. They’re working to strengthen collective defence and build coalitions of the willing — not only within the EU but also with partners such as Canada and the UK — to support Ukraine in its defensive war against Russian aggression and to achieve a just peace,” Truszczyński says.
“Without cooperation with the United States and a constructive American stance, this will be far more difficult — if not impossible — to achieve.”

According to the EDA, in 2024, the 27 EU member states collectively spent €343 billion on defence — a 19% increase from 2023 — representing 1.9% of EU GDP. This remains below NATO’s 2% target, a persistent source of tension with President Trump, who has repeatedly urged Europe to spend more on its own defence.

“It’s in our collective interest to maintain strong cooperation with the United States, while also deepening our internal cohesion and forming alliances with like-minded countries. Strengthening our own defence and collective capacity is equally essential. Only then will we be able to support Ukraine effectively and sustainably — so that it can anchor itself firmly in the European Community and be protected from Russian aggression,” emphasizes the former diplomat.


Euroscepticism threatens EU unity

However, EU unity on Ukraine remains fragile. Hungary maintains a negative stance, Slovakia is cautious — despite recently resuming military aid — and the Czech Republic could also shift direction following the ANO party’s populist victory in the October 2025 elections. Analysts at PISM (Polish Institute of International Affairs) warn that the return of Andrej Babiš could mean reduced support for Ukraine and weaker ties with Poland, in favor of closer cooperation with Hungary and Slovakia.

“The presence of eurosceptic or self-serving parties in EU governments has always been an obstacle — in the past, today, and unfortunately in the future. Political shifts within member states will not always move toward strengthening liberal democracy. Populism, by its nature, undermines European integration and the rule of law. It weakens us collectively on the global stage. The responsibility now lies with democrats in every country to resist populism effectively — that’s what will strengthen European unity,” Truszczyński stresses.


European public opinion: cautiously optimistic

Despite political challenges, public confidence in the EU remains relatively strong. According to the Spring 2025 Eurobarometer, 52% of Europeans say they tend to trust the EU — the highest level since 2007. Meanwhile, 43% have a positive image of the Union, 38% a neutral one, and 18% a negative one. Furthermore, 62% of Europeans are optimistic about the EU’s future, and 88% agree that there should be stronger, rule-based cooperation between countries and global regions.


Summary:
The European Union remains a major global power, but its relative influence is declining amid global economic shifts and internal political divisions. To remain relevant, Europe must rebuild transatlantic trust, deepen internal solidarity, and defend liberal democratic values from populist erosion. Without unity — both within the EU and across the Atlantic — Europe’s ability to act as a strong geopolitical player and defender of democratic stability will continue to diminish.

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