Across Europe, the streets have begun to boil again, a palpable discomfort rising from the cost of living, increasing impoverishment of workers, and a limited horizon with little sign of a recovery after the pandemic and the ongoing technological shift. Millions have taken to the streets in recent weeks. In Germany this week, public transport was paralyzed as people demanded fair wages, described as the largest strike in three decades. In the United Kingdom, teachers, civil servants, nurses, and railway workers have faced months of exhaustion. Similar unrest has taken hold in Portugal, the Netherlands, and Belgium, while France has seen its social peace unsettled by pension reform.
This social anger spreads as a rising tide across a continent where economic shocks have piled up for three years. The term black swan, used by economists, captures unforeseen events that create major social effects. The first wave was the coronavirus pandemic, followed by the Russian invasion of Ukraine, and now renewed turmoil in the financial system. Each crisis has produced a cascade of consequences, setting the stage for the kind of shock many countries are experiencing. What happened in France last year, with a higher retirement age pursued with limited social dialogue, is mirrored elsewhere by a loss of purchasing power driven by a broad rise in prices.
Riots in the streets of Paris highlighted the strain.
“Two factors stand out here: the legacy of Covid and inflation”, explains a Belgian economist. Inflation has created a difficult situation to manage, eroding purchasing power and savings. It does not discriminate, yet it hits low-income households hardest.
Last year, euro-area inflation rose to 9.2 percent on average, while wage growth hovered around 4 percent. Wages have stagnated for years in the developed world, contributing to wider inequality and the squeeze on living standards, according to a professor of economic policy from a major university. For some time, the European Central Bank had argued against immediate payroll increases. History, the expert notes, suggests inflation can harden when a cost-price spiral coincides with rising wages.
Transport workers strike in Berlin.
But the data shifted the outlook. By late 2022, inflationary pressure and rising profits became a central factor in the economy, even as energy costs remained high. Some manufacturers appeared to be expanding margins to cover higher costs amid supply-demand mismatches. The central bank signaled that this behavior underscored the need to respond to inflation with prudence.
This observation deepens the sense of inequality felt by many citizens who see profits for energy companies, banks, and food producers growing while daily life grows more costly. Only a handful of EU countries experienced unexpected income tax relief, including Spain. Workers bear the brunt of the crisis, not its cause, according to an advisor to a European trade union think tank. He called for measures to curb speculation, reduce dividends, and curb food price manipulation.
Strike activity continued to surge in London as public transport became a focal point for protests.
Lessons from the 2008 crisis still linger. As growth returned, the ruling elite faced increased scrutiny, and while governments offered more generous support to vulnerable workers and families than after 2008, discontent persisted in many countries. A notable economist from a Madrid university notes that people feel the government is unreliable, or they fear greater sacrifices ahead as the horizon grows uncertain.
Experts agree that some sacrifices are inevitable to ensure retirement sustainability and to finance the ecological transition. The challenge is the starting point: many European societies are aging, and state treasuries remain heavily burdened by the sequence of crises over the past decade and a half. Precautions can no longer be postponed, yet wide swathes of the population resist bearing the burden themselves.
Holland presents a clear example. The government sought to curb nitrogen emissions from farming, transportation, and industry to protect biodiversity, with a target of reducing cattle numbers by a third by 2030. The plan envisioned payments to farmers or farm relocations to meet the goal. Yet voters responded in a recent election by elevating a populist farmer’s party that rejects these plans to the top ranks, signaling a potential shift in the coalition’s path.