Europe's economy survived 'terrible prophecies' but must now tackle trade with China: EU's Gentiloni

The European Union has successfully avoided the "terrible prophecies" that threatened its economy in recent years, but must still contend with Russia's war in Ukraine and a tenuous trade relationship with China, outgoing European Commissioner for Economy Paolo Gentiloni said Saturday.

The bloc's economy underwent "overall a weak growth, but nothing of the terrible prophecies that we heard in the last two or three years: recessions, blackouts, divergence, divisions in Europe in front of Russia's invasion," Gentiloni said in an interview with CNBC's Steve Sedgwick at the Ambrosetti Forum at Cernobbio, on the shores of Italy's Lake Como.

A former prime minister of Italy, Gentiloni has served as the European Commissioner for Economy under EC President Ursula von der Leyen since December 2019. The European Commission is responsible for the 20-nation euro zone's economic strategy and legislation — such as tariffs — while the European Central Bank oversees the region's monetary policy and interest rate decisions.

Gentiloni will not be returning for a second term as commissioner following Von der Leyen's tumultuous re-election as president — but he has laid out the economic picture that awaits his imminent successor.

"The economy is growing, slowly, but growing. And the risks of differences among the European Union, that was very high when the pandemic happened, are very limited," he noted. "The bad part of the story is that if we don't raise out capacity in terms of competitiveness, if we don't make enormous progress in what we call the capital markets union, and if we don't address the challenge of defense … if we don't do that, well, the new situation of the world will appear very difficult for Europeans."

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