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Europe’s economies are grappling with a multifaceted crisis marked by industrial stagnation, geopolitical instability, and the lingering effects of the energy crisis. Two critical factors are further impeding recovery: real wage stagnation and subdued household consumption.
Even though European labor markets have been relatively stable since 2020, real wages have failed to keep pace with inflation, eroding purchasing power and dampening consumer confidence in countries like Germany and the U.K. This, in turn, has stifled domestic demand, a key driver of economic growth. The result is a self-reinforcing cycle of weak consumption and sluggish business investment, exacerbating Europe’s broader economic