Europe’s Struggling Economy—Can the U.S. Help?

By: Dr. Lynn Reaser


As Europe struggles to prevent falling into recession and deflation, is there anything we can do from this side of the pond to help?  While our abilities are limited, our policies and performance could have a sizable impact.

Directly, on the policy front, we could actively work to reach agreement with the European Union on the pending trade and investment deal–the Transatlantic Trade and Investment Partnership (TTIP). This would cut customs tariffs on exports of various goods to the U.S., allow more European services to be exported, enable critical inputs to be imported for final products, and allow European companies to bid on public contracts. Although the full effects of the TTIP would take time to be fully recognized, the positive impact on European planning and expectations could be sizable.

More indirectly, a vigorous U.S. economy would generate demand for more European consumer and industrial products. A strong dollar would further boost European exports and draw more American tourists.

Europe’s solution to its economic problems will require its own policy responses, such as from the European Central Bank, and fundamental structural reforms in many countries.  Nonetheless, the U.S. can have a positive impact on Europe’s outlook for 2015 and beyond.


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