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This chapter analyses the European recession and the imbalances due to the poor economic policy adopted by the European Union (EU) before the UK's exit: we characterize the multifaceted dimensions of the emerging two-speed Europe. . We focus on the EU's enlargement process, the economic crisis and the economic divide, the upsurge of unemployment and the following internal and external migrations, as well as the push and pull forces of migration due to the different purchasing power differentials, the role of inflation differentials with Germany and the ineffectiveness of internal devaluation, the inequality divide and the role of in-kind transfers, the demographic imbalances and the procyclical birth–gross domestic product relationship, the case of "fortunate" Germany, and the "generational stagnation" as a world risk of slow growth. The chapter concludes that the role of fiscal policy and public investment is crucial to escape the risk of low inflation or a deflation trap.

DOI: 10.1007/978-3-319-47864-7_3

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