European Economic Decline

November 11th, 2025
Sarah Kumar

The European economy is moving toward stagnation and growing structural gaps. Last year, the European Commission’s projected growth was just 0.9% for 2025, and only barely higher for 2026. The manufacturing sector of many of its countries is falling, with export demand weakening and rising energy and input costs. Additionally, Germany’s economy declined in 2023 by 0.3%, then in 2024 by 0.2%.

One of the factors is the drastic drop in investment and external capital inflows. Foreign investment into Europe fell to its lowest in 9 years, in 2024, with investment projects declining by 5% year by year, and even larger declines in major economies like Germany and the UK. This change shows how investors are seeing Europe as offering lower returns, high regulation, and weaker growth prospects than Asia or North America. On top of that, aging populations and declining labor forces are harming its potential output.

Trade, which was previously a strength for many European economies, is now under pressure too. Global trade expansion has slowed down, and protectionist pressures, like low labor issues, job protection, and national security, are also factors hindering Europe’s exporting. The European Commission reported that even with a small recovery, the economy is still vulnerable, especially to policy spillovers from other nations. At the same time, France, Germany and others are facing high input costs and weak global demand in key sectors like automotive and energy-intensive manufacturing.

Monetary policy space is also facing problems in Europe. With many governments running deficits, and aging populations increasing pension and healthcare issues. The International Monetary Fund called for an increase in public investment for infrastructure and green technologies, though it hasn’t been implemented much due to budget constraints. Although inflation has been lessening a little, wage growth and consumer demand haven’t changed much and are becoming limiting factors for domestic growth.

Europe’s economy is facing a crossroads; it has to either go through structural reforms, like boosting investment in innovation and reducing regulations, or accept its decline. Some economies, like Poland or Spain, are showing signs of growth and stronger resilience, but the major ones, like Germany, France and Italy, are falling behind. The consequences are not just slower growth in comparison to other nations but also a diminished role in global economics and politics as a whole.

Extemp Question: Can Europe’s economy stay strong despite US political turmoil?

Extemp Analysis by Andrew Lu

AGD: Jumping straight in, this topic is economic, which means it has a TON of potential for jokes. I can think of like 3 in the first 15 seconds, as you can tie Trump/US leaders quotes from resources like Not The Onion, European leaders, or even just economics in general. I strongly oppose this, but canned AGDs and on-tops will work too. For me in Melissa semi-finals, I gave this speech. I went with a narrative of a 7th generation clockmaker losing his work and craft because of US tariffs. Either way, the AGD should be quick, fast, and creative.

Background: I did a bit of work in the background defining the US political turmoil (government shutdown, tariffs, strong political partisanship, polarization etc.), and I mainly framed it as “when president Trump headed into office in January", because of how he changed the political landscape and how the US threats Europe. After that sentence, I quantified that with a Euro Stat source that basically says Europe will lose X billion dollars (I believe 8) because of the most current government shutdown, highlighting how impactful US politics have on the European economy. Then, I would recommend doing a Conflict Statement (NSDA Champion Robert Zhang does this), where I personally said something like “it is because of this that international experts question Europe’s capability to stay economically afloat while the US is in political tension” — essentially hinting to the question and setting it up logically.

Significant Statement (SS, SOS, whatever you call it): I really like the Sig Statement, because it gives a lot of work to highlight not only the importance, but to start a bit of a tug at the heartstrings of judges, and actually make them care. For me, I often do a compound sentence, especially if my background ends up to around 1 minute. In this case, I said something along the lines of: “However, considering that the [Source warns/laments/etc. that] if the European economy actually fails, not only would the US lose a key ally, but it would give grounds to a rise in authoritarianism, making it a moral imperative to ask…”

Question/Answer: restate the question, the answer I gave was Unfortunately No, because the lack of US support is accelerating their downfall, and we can see this in 3 indicators. This sets up my answer without being too complicated but also capable of answering the question soundly.

The substructure: I did was expectation verification for 2 points and a weird past present future for point 1, because it made more sense to give a bit more history.

Point 1: Financial Institutions are Leaving Europe

Basically the on-top was about UT Austin students can’t locate Europe on a map, then financial institutions also can’t because they’re leaving too (something corny but funny like that works). Basically just said Europe's economic strength relied on manufacturing, because it attracted financial institutions, but now because of this manufacturing failing, and more importantly, the US political turmoil introducing tariffs on European manufacturing, it has plummeted to record lows. Because of that financial institutions leaving, rhetoric and impact impact!

Point 2: Euro is failing

Did something with JD hairline and compared it to Euro. Basically the expectation is Strong currency = strong nation/Union. Verification is: But unfortunately, the Euro is failing (many warrants), and alternatively because of turmoil, has caused countries and trade to shift to Chinese Yuan and digital currencies. Rhetoric and impact: money writes the lines of the world, in his world, Europe is writing a blank check… (that’s all I remember).

Point 3: Europe is behind on AI

Some on top about Soko men dating AI, then Europe is slow to act. Expectation is AI impacts geopolitically, economically, indicating not just economic strength now, but also importantly in the future. Verification is that because of Trump’s secret memorandum on February 21st, 2025, which framed Europe as a competitive AI, the US is now cutting AI support for Europe. Because of this, Europe is 1 year behind in AI and 40% slower to act. So clearly, because of political turmoil in the US, Europe is not only suffering but has no solution in the AI-driven market future. Rhetoric and impact.

Conclusion: I just first restated Sig Statement in a different way (RJ Rummel saying authoritarianism is bad and kills millions essentially, Europe's fall would lead to that), restate points, had a banger punchline, speech time 7:17. I would recommend wrapping up faster if the judge cares about time.