The EU is one of the major economic hubs, boosted by international trade deals with countries such as Canada and Japan.
However, while Tokyo’s economy is the third-largest in the world and plays host to some of the finest hi-tech manufacturing firms, Japan also has cause for concern.
For around 30 years, Japan has seen a cycle of low growth and low inflation, with its ageing population making the situation even more difficult to change.
This has been described as ‘Japanification’, and the EU is facing similar problems which could lead to a debt crisis.
Economic commentator Bill Blain highlights just how severe the impact of this could be for Europe in the long term.
He said: “Does that gallop through the treacle that is Japan’s complex political economy trigger any alarm bells re: Europe? Zombie, debt-ridden companies? Negative real interest rates? A lack of leadership? Trade wars?
“The shocking truth is Europe may actually be in much worse shape than Japan ever was.”
Mr Blain first points to unemployment in the bloc, an issue which was less severe in Japan.
He continued: “Europe faces an employment crisis for young people that Japan did not.
“Ten percent youth employment seems to have become an acceptable number for Brussels.
“That’s a social time bomb in cities with large, unhappy and disenfranchised immigrant populations, and in decaying rural backwaters – witness the Gilet Jaunes in France, the rise of the right and unrest elsewhere.”
Mr Blain also points out in his CapX column that Japan has its own currency, granting it control over more of its economic policies.
In the Eurozone, countries share the same currency meaning Italy, for example, cannot stimulate its economy without agreement from its European partners.
Mr Blain said: “Italy has to go cap-in-hand begging more from Brussels as its economy collapses after the pandemic zero-tourist season.
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According to the European Commission’s Ageing report 2018, the total population in the EU is projected to increase from 511 million in 2016 to 520 million in 2070.
However, the working-age population (people aged between 15 and 64) will decrease significantly from 333 million in 2016 to 292 million in 2070.
The report also finds that the ageing of Europe’s population will put pressure on public spending.
It states that overall in the EU, the total cost of ageing (public spending on pensions, health care, long-term care, education and unemployment benefits), is expected to increase by 1.7 percentage points to 26.7 percent of GDP between 2016 and 2070.