As the US raises tariffs to defend local industry and deregulate key sectors, and China beats predictions to meet its 5% growth target for 2025, received wisdom would have you believe that Europe is set to be left in the dust by the two global economic superpowers.
Europe’s continued economic woes, caused by a lack of a lack of productivity growth and the imminent threat of punishing US tariffs, has meant doomsday predictions about the bloc’s economic future are now de rigueur for analysts and commentators.
In a 400-page report released in September of last year, former Italian Prime Minister and President of the European Central Bank Mario Draghi claimed he had stumbled on the solution – the only issue with his ointment, however, was that it came at the small cost of €800 billion.
It’s difficult to be upbeat about Europe’s economic prospects in the current environment, but the bloc’s leaders are beginning to carve out a way forward. And according to the Clean Industrial Deal which the Commission set out on Wednesday, protecting the EU’s industry will be at the heart of the bloc’s strategy to catch up with the US and China.
‘Europe’s industrial base is central to our identity and essential for our competitiveness’, the draft proclaimed, identifying six ‘business drivers’ that can power the continent’s economic growth.
The draft’s language is indicative of the bloc’s shift towards ‘near-shoring’, keeping very much in vogue with the prevailing global trend, which seeks to protect supply chains from economic and geopolitical risk.
But as the EU looks to revitalise internal productivity, the eastern European experience of joining the common market serves as a timely reminder of the importance of integrating industrial processes to power sustainable, long-term growth.
More than 20 years after the first eastern European countries joined the bloc, it’s easy to forget how much progress the region has made towards prosperity. But as the region’s members gradually joined their industrial and manufacturing processes to the EU, the integration of western European technical expertise with local manpower and production capacity propelled significant growth whose impact was felt across the entirety of the continent.
Some of the most famous examples of this coupling can be found in the automobile industry. Skoda, the Czech automaker, was transformed into a ‘world-class manufacturer’ thanks to its partnership with German giant Volkswagen. Renault, similarly, transformed Romanian car manufacturer Dacia into a household name, who announced the sale of their 8 millionth car back in 2023.
A lesser-known example is Austrian company Petrochemical Holding GmbH, owned by the experienced entrepreneur Iakov Goldovskiy, which transformed several European petrochemicals businesses into top-notch manufacturing outlets.
Petrochemical Holding’s ownership of Hungarian companies TVK and Borsodchem, in particular, were a particular high point in the history of the nation’s petrochemicals industry.
The net result of this marriage of East and West was an extraordinary period of economic growth that saw the region’s leader, Poland, increase its GDP by a staggering 788% from 1990-2018. The nation’s fortunes look set only to continue, as recent predictions suggest that Poland could overtake the UK in GDP per capita by 2030, if current trends hold.
As many eastern European nations are now fully integrated into the European Union, the scale of the achievement is often understated. But six of the last 10 nations to progress from the IMF’s ‘advanced economy’ class have come from eastern Europe, with the remained made up of microstates or territories such as Puerto Rico an San Marino.
And the benefits of the region’s integration were enjoyed across the entirety of the Union. According to research conducted by the IMF, existing members of the EU were 10% better off by 2019 than they would have otherwise been without the bloc’s enlargement.
Undoubtedly, there are few historical parallels that can be drawn from the eastern European experience to inform today’s policymakers. In 2025, European leaders no longer have the vast, untapped manufacturing potential of the former eastern bloc to unleash in the name of rapid economic growth.
But as EU leaders look to defend local industry as part of their draft proposal, they would be wise to remember the spirit of the early 2000s that transformed the region’s economies and spread the benefits across all member states.
Open markets and the integration of European industry into neighbouring and global supply chains can provide the impetus needed to kickstart the continent’s industrial revival.
