OTTAWA – Economic trends across the world are starting to split, with Canada, the UK, and the EU facing mounting problems that put their futures at risk. A mix of ambitious environmental targets, high immigration numbers, political tensions, and falling investment has left these regions with weak growth and high debts.
Inflation remains a problem for all three. At the same time, the United States is showing solid growth during Donald Trump’s second term, which stands out sharply against other developed economies. This report looks at what is driving these shifts, focusing on Canada’s struggles and how anti-migrant attitudes in Europe and North America are rising.
Canada: Growth Hits a Wall
Canada ranks last among its economic peers for growth in 2025, according to the IMF, which puts Canada’s expected real GDP growth at just 1.2% for the year. This revision is due to poor demand at home and tougher export conditions.
The country relies heavily on the U.S., with 78% of its exports heading south. Trump’s White House implemented a 35% tariff on Canadian products as part of efforts to curb illegal immigration and fentanyl. If these tariffs come in, they could disrupt the supply chains built under the USMCA deal, hurting Canadian industry even further.
Canada’s pledge towards net-zero emissions is having a major effect on the economy. The current government’s carbon taxes and renewables push have bumped up costs for sectors like oil and gas, which make up about 7% of GDP.
The price of energy has climbed, and small businesses are squeezed as a result. Inflation hit 4.5% in early 2025, well above the Bank of Canada’s 2% goal. Government debt is also at record levels compared to GDP, now 112%, which leaves little room to spend as interest payments eat up more of the budget.
Immigration has also not worked out as planned. The annual arrival of over a million newcomers, meant to tackle labour shortages and an ageing population, has worsened pressures on housing and public services.
Home prices are up, and public frustration is growing. Protests are breaking out in cities such as Toronto and Vancouver. Tensions over migration are rising, leading to clashes and a 15% drop in foreign investment in 2024 compared to the year before.
The UK: Sluggish Growth and Policy Tensions
The UK is in a similar spot, with GDP growth set at just 0.75% for 2025, half of what was hoped for earlier. The Labour government’s net-zero goal for 2050 has led to more rules for industries, raising costs for manufacturers and carmakers.
Energy bills have increased as the country moves towards more renewables, which has been particularly hard for households dealing with 4% inflation. The Bank of England has cut rates to 4.5% in an attempt to help, but high costs and ongoing political demonstrations make a recovery harder.
Immigration continues to stir debate. The post-Brexit points-based system was meant to attract skilled people, but instead, net migration hit 764,000 in 2024. Services and housing are under strain, fuelling anti-migrant attitudes and support for far-right parties.
With farmer strikes, city protests, and lagging stock markets, political uncertainty is growing. The UK’s debt now matches its GDP, leaving the government with fewer ways to tackle its economic problems.
The EU: Recovery Faces More Threats
The EU’s predicted GDP growth remains stuck at 1.0% in 2025, the same as last year. The Green Deal, which aims for net-zero by 2050, is making business more expensive, especially in Germany and Italy, where manufacturing forms a big piece of the economy.
As the EU shifts away from Russian energy, higher prices push inflation to an average of 3.5% across the Eurozone. Germany is at risk of recession due to weak exports and the threat of more U.S. tariffs.
Migration is testing the EU’s unity. Between 2020 and 2024, the EU took in 5.1 million migrants, many fleeing conflict in Ukraine and the Middle East. While new arrivals have helped labour markets, public pushback has been strong.
Nationalist parties are gaining influence in France, Germany, and Italy. Protests have led to unrest, scaring off investment. The EU’s debt-to-GDP averages 83% but is much higher in countries like Italy and Greece, making it harder to respond to crises and leading to yet more protests over cutbacks.
Trump’s 10% tariffs on EU goods could cut Eurozone GDP by 0.4% according to J.P. Morgan, with Germany’s machinery and car exports most exposed. The EU is considering retaliatory moves and seeking deals with other partners, which risks starting a trade war and slowing growth even further.
In Canada, the UK, and the EU, unhappy voters blame migration for rising costs and stretched services. In Canada, 62% say immigration is too high. In the UK, far-right groups point to inflation and crowded services. Across the EU, nationalist parties claim migration threatens stability. Protests, sometimes violent, are affecting investment as political risks rise.
The U.S.: Growth Outpaces Rivals Under Trump
By comparison, the U.S. is seeing steady economic expansion. Forecasts put GDP growth at 3.0% for 2025, down from 2.8% in 2024 but higher than in Canada or Europe. Trump’s policies focus on tax cuts, less regulation, and tariffs.
Quitting the Paris Climate Accord and cutting green rules have lowered energy costs, giving manufacturers and families a boost. A $500 billion spend on AI has helped firms like Nvidia and Tesla post gains, despite the uncertain stock market.
Tariffs have brought in an estimated $400 billion, equal to about 1.3% of U.S. GDP, and pushed companies to invest at home. Critics warn this could lead to higher prices, and J.P. Morgan expects consumer inflation to rise by up to 1.5 percentage points in 2025.
Tighter immigration controls have curbed illegal entries, but also sparked court cases and public protests. Inflation worries remain, with 64% of Americans linking price rises to tariffs. Despite the risks, unemployment stays below 4.5%, and tax cuts continue to support spending.
The growing economic gap between the U.S. and its peers shows the problem in balancing environmental and social goals with stronger economies. Canada’s weak growth highlights the dangers of heavy tariffs and expensive policy changes.
The UK and EU are caught between political division and the costs of going green, with anti-migrant voices growing louder. The U.S. approach shows stronger results for now, but there are doubts about how long this can last, given possible inflation and trade rows.
For Canada, the UK, and the EU, restoring trust and attracting investment will depend on lowering political tensions, cutting red tape, and finding ways to manage tariffs from the U.S. Delays or weak decisions could lead to deeper trouble, especially as debts and economic uncertainty rise.
The choices ahead will decide whether these economies see a stronger recovery or face further setbacks in the years to come.
