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For much of the past decade, the euro area has been an anchor dragging down the global economy. It is in danger of being so again.

The European Central Bank, the European Commission, and European politicians have repeatedly made destructive choices at the expense of Europeans and the rest of the world ever since the first rumblings of the financial crisis. The consequences have been catastrophic unemployment, especially among the young; rising poverty; and—perversely, given their stated objectives—government debt burdens that are increasingly difficult to sustain.

At the same time, Europe’s domestic weakness has curtailed spending on goods and services from its trade partners; instead, they have been forced to absorb the resulting glut of excess European productive capacity.

Sometime around 2015, it seemed as if Europe had finally turned a corner. None of the bloc’s fundamental problems had been fixed, but the generalized financial panic had stopped, and monetary stimulus had begun to kick in. The depreciation of the euro helped by boosting exports, and the collapse in oil prices helped by reducing spending on imports, although the bulk of Europe’s recovery was driven by rising domestic spending on consumption and investment.

Now, the brief and overhyped “euroboom” of 2017 has completely faded. The latest official data show the euro area growing at the slowest annual rate in more than four years. Real gross domestic product grew at an annual rate of just 1.2% in the first nine months of 2018. The bloc grew 2.7% in 2017, 2.1% in 2016, 2% in 2015, and 1.6% in 2014.

Read more: Why the Euro Won’t Replace the Dollar

It would be easy, but wrong, to attribute the slowdown to temporary idiosyncratic factors. Italy’s borrowing costs have been elevated since May, for example, while German vehicle exports were temporarily hit by the introduction of new pollution standards for diesel engines. In fact, the slowdown is broad-based across all of the biggest economies—Germany, France, Italy, and Spain—which together account for roughly three-quarters of the bloc’s output. (The hit to the French economy from the recent “yellow vest” protests won’t show up in the GDP data until the fourth-quarter numbers are published next spring.)

Worst of all, Europe’s slowdown is being driven by a steady and grinding reduction in the growth rate of private consumption, rather than some temporary volatility in investment spending or the trade balance. French consumer spending is growing at its slowest rate since the beginning of 2013. Italian consumption has flatlined and is in danger of shrinking outright. The deceleration of private spending is most extreme in Germany, with consumption growing at its slowest pace since the financial crisis. Spain is the strongest of the big four economies, but it, too, has experienced a notable slowdown relative to its average since 2014.

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Consumption is ultimately what makes business investments profitable, so if European consumers keep cutting back, European businesses will either have to sell more abroad as exports or cut investment. Either choice would be bad news for the rest of the world. Producers elsewhere would lose out if global consumers were forced to absorb the glut of excess European production, while investment cuts would reduce European demand for imports.

Recent surveys of European businesses suggest the situation is only getting worse. IHS Markit reported that “backlogs of work fell for the first time in almost four years” in December as businesses adapted to “the reduced inflow of new business.” Focusing on Germany, Markit’s survey found that business “optimism was the lowest recorded for over four years,” marking a “stark contrast from the situation this time last year.” In France, Markit’s “latest flash data pointed to an outright contraction in France’s private sector for the first time in 2½ years.” In Italy, “output fell at the fastest pace in 67 months.” Spain is a relative bright spot in terms of actual orders and activity, but even there, “business expectations were at their lowest level since June 2013.”

Other macro data suggest that the danger for Europe is more likely recession than overheating. Consumer prices excluding food, energy, alcohol, and tobacco have consistently been growing just 1% each year for the past six years. There has been no upward trend, despite the ECB’s previous commitment to restore inflation to its target of “below, but close to, 2%” and its subsequent asset-purchase program. Moreover, unemployment remains crushingly high across much of the bloc. (The major exception is Germany, but even there, the official jobless rate is depressed by millions of low-paid part-time workers.)

These are the kinds of conditions that normally make policy makers cautious about inadvertently pushing their economy into recession. Europe’s incomplete monetary union makes it especially fragile, and for all of the reforms made since 2011, the integrity of the common currency has not been tested by a broad-based downturn.

Yet the ECB seems convinced that its job is done. At its most recent meeting on Dec. 13, the central bank confirmed that it would stop adding to its bond portfolio by the end of the month. The next step would be to start raising interest rates, perhaps as soon as next summer.

Admittedly, the ECB has not committed to tighten on a fixed schedule and ECB President Mario Draghi emphasized in the postmeeting news conference that officials chose to “keep optionality as a dominant feature” of their policy stance. According to him, their future choices will depend “on the situation of the economy” rather than arbitrary concerns about the calendar or the size of the balance sheet.

The problem is that Draghi will be retiring next year. In the worst-case scenario, he would be replaced by someone as incompetent as his predecessor, Jean-Claude Trichet, as part of some grand compromise to appease politicians in Northern Europe. The likelier outcome is that Draghi’s replacement would have sound economic judgment, but lack the Italian’s skills at getting what he wants out of a diverse group of independent-minded officials. With Europe’s economy slowing down, this is a risk to watch.

Write to Matthew C. Klein at matthew.klein@barrons.com