Looking back, 2025 may feel like a year that Europeans can be relieved about. Counter to the ‘peak pessimism on Europe’ at the beginning of the year, Europe avoided a recession, its stocks performed decently and global markets were outright upbeat in the end.
Some headlines even look promising: technology investment is booming, defence budgets are expanding and reshoring creates opportunities in some markets. What’s more, in places where industries suffer, governments are finally hearing corporate concerns.
But beneath these visible gains lies a slower-moving erosion that threatens the foundations of growth. It’s not a good moment to downplay the price of fragmentation. Some of these costs are well-known, while others receive less attention. We should all be familiar with them, as well as with the fact that many of them are likely to rise over time.