One may call it a tsunami. One may call it something else. However, during these past two weeks, the EU has had its fair share of news headlines, on different issues, which seem to be coming to a head all together.

The European Central Bank cut its interest rate. The European Parliament elections have seen an increase in overall support for what are referred to as right-wing parties, even if mainstream centre parties are expected to retain the majority, which may not be large enough to guarantee Ursula von der Leyen a second term as European Commission president.

The surge of right-wing parties was most noticeable in the EU’s two largest countries, Germany and France, a development which could bring about political uncertainty in these two countries, and consequently on the rest of the EU. This is, in fact, what the EU needs least today – political uncertainty.

Europe is seeing Russia having the upper hand in Ukraine, the conflict in the Middle East showing no sign of ending, a climate crisis which experts claim is spiralling out of control, a US presidential election which is uncertain in its expected outcome, China increasing its influence in various parts of the world, and a possible trade war between the US and China.

The economic context within the EU, and in particular the eurozone, is also very difficult to decipher. For a number of years, the ECB had followed the path charted by the Federal Reserve of the US when it came to setting interest rates.

Last week, the ECB diverged from the Fed and cut interest rates, while in the US the expectation is that, at best they will be maintained at current levels, if not increase them.

The EU is having to face internal political uncertainty and external threats from a position of weakness

The reasoning behind the ECB decision to cut interest rates is that the economic data within the eurozone is pointing to disinflation. The projections of economic growth for 2024 are of 0.9%.

In 2025, the eurozone economy is expected to grow by 1.4% and by 1.6% in 2026. Inflation is projected to average 2.5% in 2024, 2.2 per cent in 2025 and 1.9% in 2026.

This projected inflation rate is well below the rates we experienced in 2022 and 2023 when they were 8.4% and 5.4% respectively. Moreover, the projected inflation rate is converging towards the 2% target of the ECB. As such, an element of disinflation has occurred already.

The positive news from this interest rate cut and the decrease in the inflation rate is that the fears expressed last year that inflation will remain too high for too long have not materialised.

Thus the normalisation process was more brief than expected. The bad news is the low economic growth. As such, the EU is having to face internal political uncertainty and external threats, such as those I mentioned earlier on, from a position of weakness.

The priorities of each EU member may change in light of the results of the European Parliament elections. The parliamentary elections in France may produce a legislative assembly whose majority is hostile to the country’s president. If this were indeed to happen, policymaking in the EU would be hampered. For example, will the drive for a green and digital economy be slowed down to respond to interest groups which made their vote count at the EP elections?

What has happened in the last two weeks may not be a tsunami, but we may be in for some dramatic moments as the EU faces its internal and external challenges. This would ask for statesmanship on the part of the political leaders.