Europe must invest to stave off economic ‘decline’ & the impact of the UK's Labour budget on business

The EU faces little choice but to act on recommendations from a high level report that it needs to invest €750m to €800m a year to head off economic “decline” in the trading bloc, according to a leading economist.

George Lagarias, the chief economist at professional services firm Forvis Mazars, says there will be difficulties negotiating the investment funds as a “common” pot of borrowing, particularly against claims that it could threaten the national sovereignty of EU member states. But, Lagarias warns, European leaders have no choice, despite the downside risks.

“Will Europe get there? As an economist, I don’t think it has any other choice. Eventually, that’s where things lead us,” Lagarias said.

Lagarias makes his comments in the latest episode of The Macro Memo, a Board Agenda podcast exploring global economic developments.

The podcast also reflected on the coming budget—the UK’s first under the new Labour government—due to take place on 30 October.

Lagarias noted that the chancellor Rachel Reeves would need one eye on “extremely jittery bond markets” which “definitely raises the level of difficulty”.

The Reeves budget faces having to address budget black holes, sluggish growth and the need to repair public services.

Tune in to the latest episode of The Macro Memo podcast for analysis and insight about the impact of upcoming events on business and the economy, in partnership with Forvis Mazars.