Alain Closier
Feb 6, 2025
Q: The Economic and Financial Gap Between the United
States and Europe: Will It Persist or Narrow?
Monthly Commentary
Q&A with Alain Closier
Alain Closier,
Senior Advisor
Paris, France, Europe
Question:
The Economic and Financial Gap Between the United
States and Europe: Will It Persist or Narrow?
What Are the Consequences for Businesses and Investors on
Both Sides of the Atlantic?
Answer:
The economic and financial gap between the United States and Europe, as highlighted by the recent growth figures and disparities in GDP per capita, appears to be widening and could persist or even deepen in the near future. While the U.S. economy continues to demonstrate surprising resilience, with projected growth between 2.5% and 3% in 2025, Europe's growth is expected to remain much lower, between 0.5% and 1%. This divergence has significant implications for businesses and investors on both sides of the Atlantic.
Implications for U.S. Companies and Investors:
For U.S. companies and investors, the weaker European economy offers attractive opportunities. U.S. companies can benefit from the relative "cheapness" of European assets. European companies are undervalued, despite having similar profitability prospects to their American counterparts. This offers U.S. investors a chance to acquire European assets at a discount. Additionally, the strength of the U.S. dollar, coupled with access to U.S. capital markets, facilitates cross-border transactions, making European assets even more appealing for acquisition.
Implications for European Companies:
On the flip side, the economic divergence also presents opportunities for European companies, particularly when looking to expand into the U.S. market:
Large European Corporations: The U.S. market's size and purchasing power make it essential for large European companies to establish a strong foothold. U.S. capital markets, despite higher interest rates, offer better liquidity and more favorable conditions than European markets. This access can drive growth and enable expansion.
European Start-ups: For start-ups, the U.S. remains an attractive destination for growth. Relocating to areas like Silicon Valley can provide access to unmatched funding opportunities, a robust technological ecosystem, and higher valuations than those achievable in Europe.
Outlook for the Future:
The trend of U.S. economic outperformance is reinforced by several factors: the strength of the dollar, favorable market conditions, and ongoing geopolitical challenges in Europe, including the political uncertainty in France and Germany. The U.S. administration's policies, which may continue to favor a more market-friendly environment, contribute to this dynamic, making it less likely that the gap will close in the immediate future.
Conclusion:
This economic divide has profound implications for strategic business decisions on both sides of the Atlantic. While Europe remains attractive for American investors seeking undervalued assets, the divergence creates long-term challenges for European companies looking to compete with the U.S. The next few years may see more European companies being acquired by U.S. firms, further cementing the financial and economic gap.
The result is an economic landscape where the U.S. continues to dominate, and European companies may find themselves increasingly at a disadvantage, unless they adapt to the shifting economic realities.
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Alain Closier, Senior Advisor
Paris, France, Europe
Alain Closier is a former member of the General Management Committee of the Société Générale group. With more than 35 years of experience in international banking and finance, he is, and has always been, passionate about creating innovative activities.
Alain Closier is a graduate of the National School of Statistics and Economic Administration (ENSAE) and holds a post-graduate degree in Economics from Panthéon-Sorbonne University, in Paris. He began his career as an economist, before joining the International Treasury department of Société Générale.
In the 90s, Alain was responsible for the international development of FIMAT. Originally only a French brokerage company, FIMAT has become in just a few years an international leader specializing in brokerage on derivative stock markets with a presence in more than 25 countries.
Alain Closier was also the creator of FIMATEX, a precursor of online brokers. In 2000, FIMATEX was one of the largest IPOs in Paris in the internet sector. After several mergers and acquisitions, FIMATEX became Boursorama, today one of the French leaders in online banking.
Alain Closier's work has been rewarded on several occasions by international financial institutions. As Director of Société Générale Securities Services (SGSS), he was elected “European Personality of the Year in Asset Servicing” in 2010 by Funds Europe magazine. Its teams were recognized both for their expertise in emerging markets and for their presence on a European scale.
Overseeing the development of the bank's venture capital activities in Silicon Valley during the 2000s, Alain Closier acquired in-depth knowledge of the problems encountered by start-ups, both in the United States and in Europe.
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