　　The picture shows pedestrians walking in front of a shop in Brussels, Belgium on January 5, 2024. Xinhua News Agency reporter Zhao Dingzhen photo

　　In 2023, the European economic recovery was difficult. Affected by internal and external factors, the European economy not only lacks growth momentum, but also shows slight signs of technical recession in the second half of 2023. In its latest quarterly economic outlook, the European Commission pointed out that the EU’s economic growth rate in 2023 will be lower than previously expected. After experiencing "high opening and low going" in 2023, Europe is about to usher in the "big reshuffle" of political power in 2024. Under the changing geopolitical situation, how the EU and major European countries properly resolve the "sequela of high interest rates" and adhere to the independent strategic development proposition will greatly affect the overall economic growth performance of Europe in 2024.

　　In the past year, high inflation, weak external demand and continuous monetary policy tightening were the three main reasons for the sluggish economic performance in Europe. Under the influence of the above three negative factors, it is difficult for the "troika" of investment, export and consumption to continuously pull the European economy out of the quagmire. Under the continuous influence of the Ukrainian crisis, the inflationary pressure, which was originally highlighted only in the fields of energy and food, has spread to almost all social consumption sectors. Although the European Central Bank recently stopped the pace of increasing interest rates after noticing the stagnation of high inflation, the continuous tightening of monetary policy to curb high inflation has already caused trauma to the real economy. In December 2023, the initial value of the comprehensive purchasing managers’ index (PMI) of major countries in the euro zone, such as Germany and France, was only 47, which has been below 50 threshold for seven consecutive months. In order to save costs, local enterprises and public departments have to cut investment and the number of employees one after another, which directly impacts the local economic vitality and consumer confidence. In the past traditional Christmas consumption season in Europe, the local retail industry showed a relatively bleak situation. According to CSA, a market research organization, the average Christmas consumption budget of French people in 2023 decreased by 3% year-on-year. The German Retail Federation reported that the overall retail sales in Germany in the Christmas season of 2023 fell by more than 5% year-on-year, and 60% of enterprises and merchants were "dissatisfied" with the sales situation in the quarter.

　　Combined with the situation in previous years, the Christmas consumption trend can map out the general economic trend of Europe next year to a certain extent. Although the European Commission had previously predicted that the real economic growth rate of the euro zone would return to the range of 1% to 2% in 2024, if a series of economic cycle "dead buckles" caused by long-term high interest rates could not be properly resolved, the prospect of European economic recovery would be hard to be optimistic.

　　When looking forward to the next performance of the European economy, the European Commission, when releasing the latest quarterly economic outlook in November 2023, believed that the European economy may usher in a moderate recovery or even rebound in 2024 when inflation is fully curbed and high interest rates and deficits are effectively relieved. Although it is lower than previously expected, the European Commission still predicts that the GDP growth of the EU and the Eurozone will reach 1.3% and 1.2% respectively in 2024, and it is expected to further increase the above growth rates to 1.7% and 1.6% in 2025. To this end, the EU intends to alleviate the "sequela of high interest rates" as the policy "chess eye" in 2024, and to stimulate the vitality of recovery with "increasing revenue and reducing expenditure".

　　On the one hand, step on the new "accelerator" of the market. In view of the persistent "weak recovery" or even "false recovery" situation, the relevant European decision-making departments intend to further dig deep into the endogenous power and optimize the allocation of market resources. It is reported that EU institutions are currently preparing a policy proposal document aimed at improving the effectiveness of the EU single market. It is hoped that through this document, member countries will be guided to deepen the docking of the business standards of the EU common market, reduce the regulatory burden, further stimulate business vitality and enthusiasm, mobilize the activity of the depressed market that has been plagued by high interest rates in recent years, and promote the theoretical "seamless integration" between the markets of 27 member countries and 450 million consumers.

　　On the other hand, tightening monetary policy will reduce the "virtual fire". Previously, in the face of record-high interest rates, the EU, the Eurozone and its member States debated the fiscal discipline rules for almost a whole year, and countries declared their opinions and positions through different means. Until November 2023, Germany took the initiative to start "debt braking". At that time, the German Constitutional Court ruled that some of the German government’s climate and energy financing plans were "illegal", resulting in a sudden increase in the country’s public finance gap to 60 billion euros, which triggered a strong shock in the European Union and other member States. Recently, the European Commission has been constantly "airing" that it will cut the budget of the energy support plan, which is affected by this. As far as the current indications are concerned, most member countries of the European Union and the euro zone will cut their budgets in 2024, and accept and implement a series of austerity policies to ensure financial stability.

　　The tree wants to be quiet, but the wind will not stop. The geopolitical changes inside and outside Europe will also affect its economic performance to a great extent. Internally, 2024 can be called a "big election year". In addition to the general election of the European Parliament in June, and the possible changes in the candidates of the main decision makers of the European Commission and the European Council, many EU and euro zone member countries such as Belgium, Austria, Croatia, Portugal and Slovakia will hold parliamentary or presidential elections. A new political dominant spectrum is about to emerge in Europe, which will greatly affect the tendency of EU fiscal and financial policies in the future. Externally, the protracted Ukrainian crisis not only burdened the European Union and many European countries with heavy economic and military assistance, but also constantly affected the stability of European energy, consumption and financial markets. The Palestinian-Israeli conflict has added troubles to the oil and gas supply that Europe was worried about, and the inflation level that has just slowed down in Europe may rise again. In addition, the above-mentioned conflict areas have caused a large number of civilians seeking to escape the war to flood into Europe, which will not only affect the local social stability in Europe, but also lead to unexpected changes in the European political ecology in the election year, and even induce a series of "black swan" incidents similar to those that occurred when a large number of external immigrants flooded into Europe around 2016.

　　Faced with external pressure, the EU hopes to continuously improve its "hard power". In September, 2023, European Commission President Ursula von der Leyen made the promotion of competitiveness a "key priority" for the EU’s next work when he delivered the State of the Union address. She asked the EU to set up a special working group to submit suggestions on how to deal with the competition of big countries in March 2024, and pointed out that after the European Parliament election in June 2024, the next European Commission should continue to focus on improving the international competitiveness of the EU.

　　At the same time, for the super-large outward-looking economies such as the European Union and the Eurozone, how to ensure their leading competitiveness is of course important, and EU policymakers should not ignore the key role played by the successful economic globalization in previous decades in the development of their single market. It is not the right choice to unilaterally amplify the competitive factors with the outside world.

　　What is worrying is that in recent years, some countries have made great efforts to make economic issues pan-secure, and often used such rhetoric as "decoupling and breaking the chain", "outsourcing by friendly banks" and "removing risks" to fool EU allies, which not only hindered the pace of global economic recovery in fact, but also made the EU start to stress the so-called "political correctness" on investment and export issues until it was hampered by ideological interference. This not only deviates from the EU’s idea of "strategic autonomy", but also does not help the EU to accelerate the pace of recovery in 2024. (Author: Chen Bo Source: Economic Daily)