The Hook: Europe wields under-appreciated microeconomic strengths but faces significant macroeconomic challenges. On the micro side, it is home to critical and innovative firms that sit at the heart of key supply chains, an advantage that markets may undervalue. On the macro side, however, slow growth, gridlock, fragmented capital markets, and fiscal limitations have long held the region back. The incentive to get creative so Europe can grow faster and leverage its massive economy is substantial.

The Spillovers: European equities outperformed U.S. peers in 2025 for the first time in many years. Attractive valuations, hopeful sentiment around fiscal stimulus, and a desire to diversify away from the U.S. have helped propel that trend into 2026. For such optimism to be sustained, however, Europe needs to reform and better negotiate with the U.S., possibly taking a lesson from China, Brazil, and India.

The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

Guest:

Edward Fishman, Senior Fellow and Director of the Maurice R. Greenberg Center for Geoeconomic Studies; Author, Chokepoints: American Power in the Age of Economic Warfare

Mentioned on the Episode:

Edward Fishman, “Want to stop Trump bullying your country? Retaliate,” The Guardian

“MEPs propose new legal framework for innovative companies,” European Parliament

“How Polymarket Is Turning Bitcoin Volatility Into a Five-Minute Betting Market,” Yahoo Finance

“Why a dart frog poison believed to have killed Alexei Navalny points to the Kremlin,” NBC News