‘Weak, very weak’ Davos chills with Trump threats for stagnating and struggling Europe

In the bars, hotels and windowless conference halls of the World Economic Forum in Davos, two themes dominated the conversation: America's ascendancy and Europe's decline.

- John Collingridge Heather Stewart Davos

If the scale of the continent's problems was unclear before politicians and chief executives descended on the Swiss ski resort, there was no ambiguity by the time Donald Trump had finished speaking.

The 47th president of the United States beamed via video into a packed conference hall to rail against stifling European regulation, car exports flooding to the US and fines and penalties for Apple, Google and Facebook.

No longer will members of Nato be able to freeload off America's security guarantee, he added, demanding they increase defence spending to 5% of GDP - a barb aimed squarely at Europe.

“From the standpoint of America, the EU treats us very, very unfairly, very badly,” he said. “We have some very big complaints with the EU.”

Trump's return to the White House has sparked a wave of soul searching across Europe. His America First doctrine and threat of tariffs on EU goods have left Europe's elite wondering how it can close the growing economic gulf with the US - and find the billions needed for extra military expenditure.

In countless conversations at Davos, business leaders and politicians laid bare the problems facing the EU: from stagnation in the core economies of France and Germany and failure to rival the American tech titans, to the rise of populism and the Ukraine war on its doorstep.

Long before Trump arrived in the White House, the European Commission had signalled its concern about weak productivity and sluggish growth across the 27-member bloc by commissioning the former European Central Bank president Mario Draghi to recommend solutions.

In his 393-page report Draghi warned Europe's productivity was “weak, very weak” and called for deeper integration and massive coordinated investment.

Since then, things have got worse. The International Monetary Fund is projecting 2.7% growth for the US economy in 2025, against just 1% in the euro area. German GDP has now contracted for two successive years.