Lamy: Weak Growth Threatens Europe's Social Model

Europe may struggle to sustain one of the world's most ambitious social models if its economy keeps falling behind its main competitors. That is the argument of Pascal Lamy, a former European Commissioner for Trade and former Director-General of the World Trade Organization. He made his case on France 24 as unrest continues in France.

Social system and weak growth

Lamy says the common cause of Europe's various upheavals is the mismatch between a very sophisticated social system, which he calls the best on Earth, and weak growth. In his assessment, Europe's potential growth rate is only half that of the United States, one-third that of China and one-fourth that of India.

He interprets the French unrest as a product of both a national tradition of political mobilization and structural weaknesses shared across Europe. Rising living costs, energy vulnerabilities and pressure on lower-income households add to social tensions that unemployment figures alone cannot explain. These pressures also show how exposed Europe is to geopolitical conflicts over which it has limited influence.

Relations with China

A second challenge is China's expanding industrial and commercial power. Surging Chinese exports threaten parts of European industry, but Lamy advocates a graduated response: negotiation first, then stronger trade defenses if needed. He says a trade war is not the European Plan A, and warns that any trade conflict with China would raise prices in Europe.

Protecting industrial competitiveness could therefore increase the cost of living for the very households whose insecurity already fuels political discontent. The prospect of Chinese retaliation also raises the question of how the costs of confrontation should be shared among member states.

In Lamy's view, Europe must reconcile social protection, competitiveness, strategic autonomy and openness in an international economic order increasingly shaped by rivalry rather than cooperation.