There are two things that Europe needs to do if it wants to break itself free from economic stagnation:

Without flexible labor markets, it will be difficult for people to pursue opportunities that better fit their interests and skills. It will also be difficult for businesses to downsize when it needs to. As a result, when the economy picks up, firms struggle to hire and expand quickly. This leads to weak job creation, slow growth and persistent high unemployment during good times and it makes it harder for people to get a job during bad times as employers would be less willing to hire people when they need jobs the most.

In addition, zombie firms are a significant phenomenon in Europe. Since the Great Financial Crisis, Sovereign Debt Crisis, and the pandemic, many zombie companies have been supported by the EU thanks to increases in subsidies and continued suppression of interest rates. Because so much of their cash flow goes to paying interest, they have little capacity to fund growth. Workers and assets get trapped in these moribund companies. Seeing interest rates spike in Europe would help with letting these zombie firms collapse, freeing up workers and assets for more productive firms.

Europe can keep its deteriorating healthcare system while making labor markets flexible and see its zombie companies collapse. European governments are inefficient at running their own land, but it doesn't mean that the private sector should also become inefficient as a result. Until I start seeing progress in improving the flexibility of labor markets and reducing the number and influence of zombie companies in the continent, I will remain bearish on the continent.