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5 maltatoday | SUNDAY • 29 DECEMBER 2024 2025 LOOKING FORWARD DONALD Trump's political re- surgence invites familiar debates about transatlantic relations and global stability. However, beyond geopolitics, it raises a deeper, more pressing question about Europe's economic and innovation stagnation. Trump's return reflects global volatili- ty and a willingness to embrace disruption, traits that Europe increasingly lacks. This moment highlights the continent's failure to cultivate a dynamic econo- my capable of responding to 21st-century challenges. The reports that delved into Eu- rope's competitiveness by Mario Draghi and the single market by Enrico Letta, published earlier this year, provide a stark analysis of Europe's persistent weakness- es. It paints a picture of econom- ic lethargy marked by fragment- ed markets, regulatory burdens, and an entrenched aversion to creative destruction. While the recommendations outlined in the reports are sound—call- ing for streamlined regulations, bold industrial strategies, and a culture of risk-taking—they re- main largely aspirational. Polit- ical compromises and a fixation on preserving the status quo have rendered these proposals toothless. The lack of urgency is especially concerning in a world rapidly defined by technologi- cal innovation and geopolitical competition. Imaginative stagnation Europe's stagnation is not merely economic but imagina- tive. Startups and entrepreneurs, the lifeblood of innovation, face formidable challenges in scaling their ventures due to regulato- ry complexity and an ingrained cultural fear of failure. While Sil- icon Valley and Shenzhen foster environments where risk-taking is rewarded, Europe clings to a conservative ethos that dis- courages ambition. This ethos is not only reflected in business practices but also in the broader regulatory frameworks that pri- oritise stability over dynamism. As Peter Thiel argues in Zero to One, innovation demands "defi- nite optimism" – a belief that the future can be shaped and engi- neered. Europe's hesitation em- bodies "indefinite pessimism," where incremental adjustments replace transformative leaps. The inertia is compounded by a bureaucratic culture resist- ant to change. The European Union's governance structures, designed to maintain balance among member states, have in- advertently created a system that stifles agility. This is evident in the slow progress of flagship projects like the European Green Deal and digital sovereignty initiatives. While visionary in scope, these initiatives are mired in delays and political disagree- ments, eroding their potential to position Europe as a leader in critical industries like AI, quan- tum computing, and renewable energy. Trump's resurgence should serve as a wake-up call. His 'America First' rhetoric, cou- pled with a focus on economic self-sufficiency and innovation, exposes Europe's vulnerabili- ties. For too long, the continent has relied on the stability of its regulatory frameworks and the strength of its traditional in- dustries, neglecting the need to adapt to a world shaped by technological breakthroughs and shifting power dynamics. If Europe continues on its current trajectory, it risks irrelevance, sidelined in a global economy increasingly dominated by those willing to embrace disruption and reinvention. The lessons for Europe are clear, and Peter Thiel's critique in Zero to One offers a compel- ling blueprint for action. The continent must embrace the unknown, prioritise first prin- ciples of thinking, and reward ambition over conformity. It is not a lack of talent that holds Eu- rope back but a lack of courage to back bold ideas. Innovation thrives in environments where failure is not only tolerated but celebrated as a precursor to suc- cess. Yet, in Europe, the stigma surrounding failure stifles entre- preneurial energy, forcing many of its brightest minds to seek op- portunities abroad. Breaking free from inertia To break free from this inertia, Europe must implement bold reforms. Streamlining regula- tions to allow startups to scale across borders is a critical first step. Governments must also in- centivise high-risk, high-reward ventures through targeted grants and tax benefits. Education sys- tems need urgent reform to pri- oritise creativity, critical think- ing, and entrepreneurial skills, moving away from rote learning that fails to prepare young peo- ple for an unpredictable future. Perhaps most crucially, Europe must undergo a cultural shift to celebrate failure as an integral part of innovation rather than a mark of shame. The Draghi-Letta reports lay the groundwork for these re- forms, but words must trans- late into action. The stakes are high: a world defined by rapid technological advancements and geopolitical uncertainty will not wait for Europe to catch up. Without decisive action, the continent risks becoming a spec- tator, watching as others shape the future of industries that will define this century. Trump's return is a remind- er that the global landscape re- wards those who dare to inno- vate and disrupt. For Europe, this is a moment of reckoning. Will it continue to drift in a sea of bureaucracy and caution, or will it seize the opportunity to lead through ambition and ex- perimentation? The choice is clear, but the path is not. Breaking free from inertia will require not only structur- al reforms but a reimagining of Europe's identity as a hub of creativity and courage. The alternative – a future of irrele- vance – should compel Europe to act with urgency and purpose. 2025: Trump's win, Europe's economic reckoning JP Fabri is an economist JP Fabri