It is a common view, especially in the US, that continental Europe is shackled by big government and a lack of reform. The corollary is that its economy and its stock markets will underperform those of the US or the UK.
It is true that Europe’s long-term growth and return on equity are capped by the size of the state and an inability to free-up product and labour markets. However, Europe’s social architecture reinforces stability. It might not be equitable or optimal, but it works, after a fashion.
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