Europe can’t survive without Britain, says Nobel Prize-winning economist
America no longer cares about freedom and democracy, so UK and EU must defend them, says Philippe Aghion Emma Taggart Economics Reporter
Emma Taggart is an Economics Reporter at The Telegraph, particularly interested in the labour market and monetary policy. See more
13 February 2026 3:42pm GMT
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Europe is too weak to survive without Britain, a Nobel Prize-winning economist has warned.
Philippe Aghion, who was awarded the Nobel Prize for economics last year for his work on the “creative destruction” theory, where new technologies lead to the loss of less productive jobs, said collaboration between the UK and Europe was vital to guard against Donald Trump’s America.
The French economist told The Telegraph that Europe “cannot make it without the UK”.
“We are too weak,” he said.
Mr Aghion stressed the importance of the UK’s involvement in Europe in the wake of the US president’s recent threats to seize Greenland and his warnings of further tariffs.
He compared the new era of geopolitics to the Second World War, claiming that leaders from Britain and Europe needed to join forces to stand against Mr Trump’s aggression.
“We used to share values of freedom and democracy with the US,” he said. “Now it’s no longer the case. The US is somewhere else. They don’t share our values any more.
“We need other countries that share these values to get together and defend them.
“Trump is not Adolf Hitler, but during the Second World War, Charles de Gaulle and Winston Churchill stood up and said we have to define certain values. I believe we are in this kind of moment.”
He said that closer collaboration between the UK, France and Germany “is key to European success”, including for defence and trade.
The question of closer ties within Europe has emerged amid sustained criticism of the bloc from senior figures in Mr Trump’s White House.
JD Vance, America’s vice-president, shocked leaders a year ago when he accused European governments, including the UK, of posing a threat “from within”.
Sir Keir Starmer headed to the Munich Security Conference on Friday, where he is expected to encourage allies to join a multinational defence initiative to help Europe rearm itself more efficiently.
This marks Labour’s continued push for a deeper partnership with Europe, as Rachel Reeves said earlier this week that she is “up for” closer ties.
Building on Sir Keir’s defence initiative proposal, Mr Aghion believes Europe should go one step further and set up its own multinational body to turbocharge new defence investments.
He said it could be in the same vein as the US’s Defence Advanced Research Projects Agency (Darpa), a government body that funds research and development for new military technology, such as drones.
“We need France, the UK and Germany to work together to set up a joint Darpa,” he said. “We are missing all this ecosystem to push for breakthroughs in innovation.”
Speaking from his office at the London School of Economics, where he is a visiting professor, Mr Aghion described how Mr Trump’s threats to withdraw defence investment from Europe had served as a much-needed wake-up call.
The US president criticised “weak” European countries last year, blaming them for failing to end Ukraine’s war with Russia.
EU and AI
Mr Aghion has entered the debate over Europe’s future after winning the Nobel Prize in October last year, along with Peter Howitt and Joel Mokyr, for work on “creative destruction”, a theory first developed by Austrian economist Joseph Schumpeter in 1942.
Their research showed how long-term economic growth is driven by new technologies replacing old, leading to the destruction of less productive businesses and jobs that are then replaced by more efficient alternatives.
This is timely given the current economic challenges facing the UK and Europe, which have fallen behind the US in terms of AI-driven growth.
He said artificial intelligence will inevitably lead to job losses, but claimed there will also be new roles added because as firms become more productive.
There was already evidence of this happening in France, he added, where Mr Aghion co-chairs a government commission on AI.
While Europe has been slower to develop new technologies that spur economic growth, Mr Aghion explained that the US had much higher levels of creative destruction, as businesses with new innovations replaced the old.
He said: “If you look at the five most innovative companies in the US nowadays, they are not the same at all as 25 years ago. In Europe, they are the same.
“In the US, they moved to high tech and biotech. In Europe, they got stuck in mid-tech and incremental innovation by the same companies.”
Mr Aghion said extensive funding for research and development has allowed the US to deliver higher levels of economic growth and productivity.
He warned that Europe lacked “a proper financial ecosystem of innovation” to support start-ups and fund new research.
All of this has allowed productivity in the US to rise much faster than in the UK and the EU.
Official figures show that between 2011 and 2019, productivity grew by 0.8pc a year in the US, compared to annual growth of just 0.5pc in the UK.
Wealth tax ‘a bad idea’
Some have blamed this recent gap on rising levels of taxation in Europe.
In his native France, there have been growing calls for a wealth tax aimed at imposing a 2pc levy on individuals worth more than €100m (£87m).
According to Mr Aghion, this would only make Europe less competitive.
“It’s a very bad idea,” he said. “You do that, you truly discourage innovative investment. Taxation should be smart, but not so high as to deter innovative policies.”
European cooperation on tax policy is also important, Mr Aghion said, as he warned that Ireland, which set its corporation tax rate at just 12.5pc back in 1999, is bad for competition.
“I’ve never been a big fan of the Irish tax policy because otherwise you are free-riding,” he said. “You become like tax havens and at the expense of your partners within the EU.
“If we want Europe to stand up, we need a minimum amount of solidarity between EU countries.”
Mr Aghion’s calls for cooperation across the Continent come as the UK Government continues its negotiations with the EU over youth movement, energy policy and food standards.
Ms Reeves described this as “first base” this week, with some suggesting that Sir Keir will pursue closer ties with Brussels to fend off pressure from backbenchers.
This has stemmed from the Prime Minister’s growing unpopularity in the polls, which Mr Aghion, who defines himself as a social democrat, blamed on a failed attempt to cut billions from Britain’s welfare bill.
“People say that if even the Labour Government is cutting social programmes, then I will try something else,” he said. “That’s how they become populist.”
As for matters closer to home, Mr Aghion addressed his own country’s recent bout of political turmoil.
Against a backdrop of sluggish growth and rising debt pressures, France’s hard-Right National Rally party are closing in on power.
Spearheaded by Marine Le Pen and her protege Jordan Bardella, the party is polling at 34pc and has secured the support of Mr Trump.
Mr Aghion warned that success for National Rally would be a “disaster” for France, while also damaging hopes for European unity.
“There is a big danger of the extreme Right taking over in France in 15 months,” he says. “I will do whatever I can to prevent that. It would be a disaster.”
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