[Video transcript]

The lights are twinkling, but for many, life in Europe feels like it's losing its shine.

(Various, no name given) 
"With the inflation everything got higher, like the price for living. In the center here, it's like at least 500 bucks. It's so hard."

"If I want to get some great food I have to invest more than I did before, so that's something I'm a bit concerned about, because I still want to have high standards in terms of food."

"It definitely feels like the standard of living is getting worse. I live in the UK but we have a lot of friends across Europe and we hear the same thing from pretty much all of them."

And most people don't expect things to improve.

An opinion poll earlier this month showed 73% of Europeans think their standard of living will go down in the next year.

And 4 in 10 people surveyed in the same poll said they "sometimes" or "most of the time" have difficulties paying bills.

(DW Correspondent Christine Mhundwa) 
"Inflation and high energy prices brought on by the COVID pandemic and the war in Ukraine have hit households hard. But Europe is actually doing better than expected. At one point some governments were planning for power outages and gas rationing, to get through a winter without Russian gas. While the economy isn't thriving, the worst fears have lessened and the big picture is less bad than was initially thought."

Despite the gloominess, there is some reason for optimism.

Wages are growing and inflation is dropping.

(Rebecca Christie, Bruegel Fellow) 
"Europe overall is pretty comfortable. Part of what makes Europe great is also part of what makes Europe challenging, which is it's inertia. You know, people are used to having a certain level of healthcare and public services. They're not used to changes in that."

(Alexander De Croo, Belgian Prime Minister) 
"If you look at European Union in global, there's not so many domains where we are not one of the top performers. We are one of the most innovative continents in the world. We are a wealthy continent with a very high purchasing power."

Europe's position as an economic superpower is being tested in the face of crisis.

But so far the continent has shown more resilience than predicted.