Lenin once quipped that “there are decade where nothing happens, and there are weeks where decades happen.” So it is with the 2020s. At the halfway mark of this decade, the world economy has already been buffeted by a global pandemic, Russia’s stunning war of aggression in Ukraine, turmoil in the Middle East, rising US-Sino tensions, an inflationary spike reminiscent of the 1970s, and the embrace of isolationist and protectionist policies around the world, the United States included.

The contours of the globalization are shifting. Even before this decade began, the world economy was being splintered by great power rivalries, rising barriers to trade and investment, and nationalist calls for firms to “reshore”, “near-shore”, or “friend-shore” production. Throw in the Trump Administration’s penchant for trade tariffs and other restrictions to cross-border commerce, and the climate today for US and Irish multinationals has never been more challenging. Around the world, politics (national security) now trumps economics (profits). The state leads, business follows.

Compounding matters, 2025 will be a challenging year for the transatlantic economy. While real economic growth is expected on both sides of the Atlantic this year, growth rates will be uneven. As in prior years, the US will lead, and Europe lag. A number of cyclical factors—strong consumer spending, robust capital investment in Artificial Intelligence (AI), and continued fiscal and monetary support—will result in US economic growth of 2.7% in 2025, according to estimates from the IMF. Meanwhile, growth in the Euro area is expected to be less than half the level of the US (1%).

Europe remains cyclically challenged by high energy prices, high sovereign debt levels and the trend towards fiscal consolidation, and competitive trade pressures from China, with the latter diminishing the manufacturing strength of Germany in particular and Europe in general. If that were not enough, the Trump Administration’s threat to impose tariffs on European goods will weigh significantly on Europe’s trade-dependent economies this year.

All of the above continues to exacerbate the well-known structural challenges of Europe. These include a rigid labor market, an aging workforce and unfavorable demographics, excessive regulations, lagging industry productivity and adoption of technology, the absence of pan-European capital markets, and the acute security threat from a more expansionist Russia. The lack of policy coordination within the 27-member states of the European Union is another structural disadvantage to growth, notably at a time when both China and the US have unabashedly embraced modern day mercantilism, or state-guided industrial policies designed to promote security and economic self-reliance.