Economic Summit in Brussels 2025 Sparks debate and uncertainty among EU member states
A heated debate over Europe's economic future and climate action
As the Brussels Economic Forum (BEF) celebrated its 25th anniversary, the question on everyone's mind was: can growth and climate action coexist? This year, the event was filled with high-level disagreements between proponents of "degrowth" and advocates for a green but growth-driven industrial policy.
Latvia's Valdis Dombrovskis, the European Commissioner for Economy and Productivity, kicked off the event with an optimistic call for unity and action, urging member states to implement long-due reforms to boost Europe's competitiveness and resilience. However, beneath the institutional optimism, a current of tension ran through the discussions.
With EU growth forecasted at just 1.1% for 2025 and inflation stabilizing around 2%, participants debated whether current strategies were bold enough to address Europe's structural weaknesses. In one standout session, Lídia Pereira, a Member of the European Parliament and representative of the European People's Party (EPP), delivered a firm defense of pragmatic, market-aligned climate action.
Pereira's remarks were a direct response to Timothée Parrique, an economist, and researcher at HEC Lausanne, who presented the case for degrowth - a theory that argues for reducing economic output in wealthy countries to align with the planet's finite resources. Parrique was unapologetic: "This [degrowth] is not a political statement... this is a scientific reality that we have to grapple with," he warned, emphasizing that economic expansion has become untethered from improvements in well-being.
The theory of degrowth, first conceptualized in the 1970s, challenges the foundational assumption that economic expansion is inherently beneficial. Proponents argue that a shrinking economy may be the only viable route to a sustainable future, considering the planet's limited capacity to absorb resource extraction and carbon emissions. However, critics counter that a move away from growth would carry immense economic risks, such as widespread unemployment and rising inequality.
Even so, Parrique maintained that "the costs of action are much lower than the cost of inaction," warning that current growth-focused policies are likely to deliver "huge drawbacks" over the long term. He urged public figures to be more forthcoming in promoting degrowth as a legitimate alternative.
Pereira, on the other hand, positioned herself as a voice of moderation in a polarized conversation. "The EU is a 'beacon of stability' when it comes to climate policy," she said, but cautioned against what she called "dangerous" solutions. "If we want to find solutions, we have to find solutions with the moderates," she added, advocating instead for an ambitious but practical roadmap that aligns green transition with industrial competitiveness.
To make her case, Pereira pointed to the industrial strategies of global rivals. For example, the United States, under the Inflation Reduction Act (IRA), and China, through large-scale state subsidies, have funneled vast resources into clean tech. Pereira argued that the EU must respond not by shrinking its economy but by accelerating investment in strategic sectors to maintain competitiveness and sovereignty.
A major obstacle to this, she noted, is the EU's fragmented capital market. Country-specific regulations and legal inconsistencies continue to hinder the creation of a fully integrated market for capital, limiting cross-border funding opportunities. Without such integration, companies must rely on traditional bank loans instead of attracting private investment, placing them at a disadvantage compared to U.S. or Chinese firms that benefit from broader financial ecosystems and more aggressive state support.
Addressing this structural flaw is essential if the EU is serious about building the foundation for "strategic autonomy in clean technologies." Without it, Europe risks falling behind in the global race for green innovation, despite its bold climate goals - including the legally binding target to become climate-neutral by 2050.
The broader context is sobering. As the U.S. administration begins to shift economic resources away from green initiatives amid rising political pressure, Europe faces both an opportunity and a dilemma: should it double down on its climate commitments through market-friendly tools, or entertain more radical shifts in economic thinking?
The debate over whether Europe should foster "industrial champions" symbolized a deeper rift: how can Europe maintain open markets while defending its industrial base? Panels throughout the day tackled the economic transformations already reshaping the EU, including the digital revolution, green transition, and geopolitical fragmentation.
The Brussels Economic Forum 2025 brought together over 1,000 policymakers, business leaders, and academics at the Square Convention Center in the heart of the EU capital. With GDP growth projections remaining modest and climate deadlines looming, Europe's path forward is far from settled - but the battle lines are increasingly clear.
Insights:Degrowth, a theory that advocates reducing economic output to align with the planet's finite resources, faces significant challenges in terms of practical implementation and potential economic impacts. While some argue that degrowth could promote environmental sustainability and social equity, critics contend that it could lead to economic instability, job losses, and rising inequality. The debate over Europe's economic future remains polarized, with some calling for a more market-friendly approach to the green transition and others advocating for more radical shifts in economic thinking.
- The debate at the Brussels Economic Forum centered around the possibility of reconcile growth with climate action in Europe.
- European Commissioner Valdis Dombrovskis urged member states to implement reforms to boost competitiveness, while tension ran through discussions concerning Europe's structural weaknesses.
- Lidia Pereira defended pragmatic, market-aligned climate action, countering the degrowth theory presented by Timothee Parrique.
- Parrique maintained that degrowth, a theory suggesting reducing economic output, is a scientific reality necessary for a sustainable future, while critics warn of potential economic risks like widespread unemployment and increased inequality.
- Pereira argued the EU should accelerate investment in strategic sectors to maintain competitiveness and sovereignty, responding to examples of large-scale resources invested in clean tech by the US and China.
- A major obstacle to this response is the EU's fragmented capital market, requiring attention to build foundation for "strategic autonomy in clean technologies," as Europe faces the dilemma of doubling down on its climate commitments or considering more radical economic shifts.
