The verdict on the European economy 22 December is clear: the dogma of fiscal austerity has once again become the sole compass for EU leaders.On Monday, 22 December, financial markets welcomed the European Commission’s firm stance, but this “firmness” translates into unprecedented social violence for the working classes.
The key development is the sudden reactivation of the Stability and Growth Pact rules. For the European economy in 2025, this means that France, Italy, and Belgium are being ordered to slash public spending by tens of billions of euros starting next year. Left-wing analysts, such as those at the CADTM, point out that this debt—used as a scare tactic—is largely the result of tax breaks for large corporations and the interest rate hikes decided by the European Central Bank (ECB).
Speaking of the ECB, its monetary policy continues to favor capital holders at the expense of households. While access to mortgage credit has become an uphill battle for young workers, European private banks are posting historic results for 2025. They are cashing in on the gap between the high interest rates they charge borrowers and the paltry returns offered on small savers’ deposits. This represents a massive transfer of wealth from labor to capital at the very heart of the European economy in 2025.
Furthermore, the issue of taxing “windfall profits” seems to have been buried by Brussels authorities. Despite recommendations from progressive economists, the EU refuses to introduce a European tax on large fortunes or on the exceptional margins of major energy and defense companies.
The European economy in 2025 is also characterized by spiraling energy poverty. As winter sets in, millions of European households are forced to ration heating due to a lack of serious regulation on energy prices, which remain indexed to speculative markets. In short, the EU economy at the end of this year is a class-based economy, where the protection of financial interests systematically tramples on the material survival of citizens. The “Great Disconnect” is not technological; it is human and social.
