Europe at a crossroads: Brussels Economic Forum 2025 sparks more questions than answers

As the Brussels Economic Forum (BEF), held in May, marked its 25th anniversary this year, the debate over Europe’s economic future turned sharply to the question of whether growth and climate action can truly coexist. Among the many high-level exchanges, a pointed clash emerged between proponents of "degrowth" and advocates for a green, but growth-driven, industrial policy.

The tone was set early by Latvia’s Valdis Dombrovskis, the European Commissioner for Economy and Productivity, who delivered a pre-recorded opening address calling for unity, action and urging member states to implement long-overdue reforms to bolster Europe’s competitiveness and resilience.

“To be truly competitive, we need to work continuously and decisively at every level – European and national…It is essential to use every opportunity to build and relaunch mutually beneficial partnerships,” Dombrovskis, addressed the audience of the Brussels Economic Forum remotely.

Yet beneath the institutional optimism ran a current of tension. With EU growth forecasted at just 1.1% for 2025 and inflation stabilizing around 2%, participants debated whether current strategies were bold enough to address Europe’s structural weaknesses.

In one standout session, Lídia Pereira, Member of the European Parliament and a representative of the European People’s Party (EPP), delivered a firm defense of pragmatic, market-aligned climate action. Speaking from the stage of the Square Convention Center, Pereira declared, “Climate leadership does not mean we must degrow,” pushing back against calls to decouple economic prosperity from ecological responsibility.

Her remarks came in direct response to Timothée Parrique, an economist and researcher at HEC Lausanne, who presented the case for degrowth – a theory that argues for reducing economic output in wealthy countries to align with the planet’s finite resources.

Parrique was unapologetic: “This [degrowth] is not a political statement… this is a scientific reality that we have to grapple with,” he said, warning that economic expansion has become untethered from improvements in well-being. “There is no point being first when you're going in the wrong direction… economic growth has lost all correlation with quality of life.” He added that wealth is no longer “trickling down” and pollution is certainly “not trickling out.”

The theory of degrowth, first conceptualized in the 1970s, challenges the foundational assumption that economic expansion is inherently beneficial. Proponents argue that a shrinking economy may be the only viable route to a sustainable future, considering the planet’s limited capacity to absorb resource extraction and carbon emissions. Yet critics counter that a move away from growth would carry immense economic risks – chief among them, widespread unemployment and rising inequality. Moreover, it remains a politically unpopular stance.

Even so, Parrique maintained that “the costs of action are much lower than the cost of inaction,” warning that current growth-focused policies are likely to deliver “huge drawbacks” over the long term. He urged public figures to be more forthcoming in promoting degrowth as a legitimate alternative.

Pereira, however, positioned herself as a voice of moderation in a polarized conversation. “The EU is a ‘beacon of stability’ when it comes to climate policy,” she said, but cautioned against what she called “dangerous” solutions. “If we want to find solutions, we have to find solutions with the moderates,” she added, advocating instead for an ambitious but practical roadmap that aligns green transition with industrial competitiveness.

To make her case, Pereira pointed to the industrial strategies of global rivals. The United States, under the Inflation Reduction Act (IRA), and China, through large-scale state subsidies, have funneled vast resources into clean tech. She argued that the EU must respond not by shrinking its economy, but by accelerating investment in strategic sectors to maintain competitiveness and sovereignty.

A major obstacle to this, she noted, is the EU’s fragmented capital market. Country-specific regulations and legal inconsistencies continue to hinder the creation of a fully integrated market for capital, limiting cross-border funding opportunities. Without such integration, companies must rely on traditional bank loans instead of attracting private investment, placing them at a disadvantage compared to U.S. or Chinese firms that benefit from broader financial ecosystems and more aggressive state support.

According to Pereira, addressing this structural flaw is essential if the EU is serious about building the foundation for “strategic autonomy in clean technologies.” Without it, Europe risks falling behind in the global race for green innovation, despite its bold climate goals – including the legally binding target to become climate-neutral by 2050.

The broader context is sobering. As the U.S. administration begins to shift economic resources away from green initiatives amid rising political pressure, Europe faces both an opportunity and a dilemma: should it double down on its climate commitments through market-friendly tools, or entertain more radical shifts in economic thinking?

Pereira closed her argument by suggesting that Europe is uniquely positioned to lead – not by shrinking, but by setting a competitive example. If done right, she implied, the green transition could serve not only as a sustainability imperative but also as a growth engine.

A fiercely contested Oxford-style debate took place on whether Europe should actively foster “industrial champions.”

 Cristina Caffarra, economist and competition policy expert, made a compelling case for enabling larger firms to compete on a global stage. Opposing her, Jan Eeckhout of UPF Barcelona warned that such policies risk entrenching monopolies and stifling innovation.

Though the result of the audience vote remains unannounced, the debate symbolized a deeper rift: how can Europe maintain open markets while defending its industrial base?

Panels throughout the day tackled the economic transformations already reshaping the EU: the digital revolution, green transition, and geopolitical fragmentation.

Eléonore Simonet, Belgium’s Minister for SMEs, emphasized inclusion, particularly for small businesses, while Marianne Vikkula of Wolt spotlighted the digital economy’s role in Europe’s competitiveness. Anna Holtkamp of the European Youth Forum brought a generational perspective, pushing for long-term thinking in economic policy.

While the Brussels Economic Forum 2025 presented no formal resolutions, the ideological contrast on stage signaled the internal tensions that will likely define EU policymaking in the years to come. With GDP growth projections remaining modest and climate deadlines looming, Europe’s path forward is far from settled – but the battle lines are increasingly clear.

The Brussels Economic Forum 2025 convened over 1,000 policymakers, business leaders, and academics at the Square Convention Center in the heart of the EU capital.