Today, Europe is struggling with a series of old and new challenges.

For half a decade, Europe has struggled with excessive debt (which remains excessively high), fiscal adjustment (which has failed to revive the continent), systemic banking vulnerabilities (which have not been nullified), and competitiveness challenges (which are worsening due to R&D cuts across the core economies).

The prime reason for the semblance of stability in Europe stems from the European Central Bank's (ECB) record-low interest rates and rounds of quantitative easing (QE). Yet, the ECB's policy tools are being exhausted.

What's worse, growth is decelerating across all EU major economies, including the current "growth engines" — Germany and Spain.

Weight of stagnation

In Germany, growth decelerated to 1.5 percent last year, despite Chancellor Angela Merkel's smart policies. Net exports were boosted by low oil prices and a cheaper euro, but lower growth in export markets is penalizing growth. In the coming decade, deceleration will prevail and growth is likely to stay at one percent, constrained by its aging population.

In Spain, growth could rebound to more than 2.5 percent in 2016. Nonetheless, economic momentum is facing increasing political volatility.

Spain's unemployment rate, though falling, remains 10.5 percent, while youth unemployment lingers at above 50 percent. In the medium-term, growth is likely to be halved by the early 2020s.

French expansion has steadily shrunk. Public and private consumption fuel growth that is likely to remain at one percent in 2016 but with downside risks. In the coming decade, French growth is likely to decelerate to less than one percent.