The last two years have undoubtedly been most challenging for the European Union’s economic system, as the pandemic threatened growth and put at risk millions of jobs.
While the dark cloud of COVID-19 remains a substantial threat, other political issues may prove to be even more daunting in 2022.
Following the departure of Angela Merkel from the political scene, the EU needs to show that it still harbours leaders with the qualities required to steer the Union away from the negative political trends that are evolving and that could threaten the economic recovery.
Perhaps the most significant threat is the resurgence of anti-establishment sentiment in parts of the Union. Weakened economies, public dissatisfaction with mainstream political parties and a probable rise in immigration could strengthen populist parties of the extreme right and left in pursuit of their agendas.
While French President Emmanuel Macron stands a good chance of being re-elected, Eastern European countries like Poland and Bulgaria are still vulnerable to political crises in 2022. Still, the new German Chancellor Olaf Scholz has made it clear that his government will be less indulgent when it comes to moves by the nationalist rulers of Poland and Hungary.
The commitment to prevent these countries from undermining the judiciary’s independence, limiting media freedom and civil rights, and rejecting the primacy of EU law over national legislation should help the European Commission project a united front in defence of EU values.
Deepening systemic shifts in the geopolitical system undermine the solidity of the rules-based international order as the US commitment to uphold it weakens. The rising tensions over the Ukraine and Taiwan, and the adversarial international relations between Russia, China and the US could fuel more political uncertainty that would affect the global economic recovery.
Despite these worrying prospects, some positive trends give rise to optimism. The massive investment planned for the EU recovery should help reduce the risk of political turbulence in some member states. The Commission and the European Council are likely to define new fiscal rules to replace the outdated Stability and Growth Pact measures suspended in 2020 because of the pandemic.
The consolidation of Franco-Italian relations might provide the leadership that the Union needs to deliver the economic growth envisaged in the Next Generation EU recovery plan. The new German coalition is also likely to support initiatives to boost public investment to modernise the creaking transport, telecoms and energy networks and meet the ambitious goals to fight climate change.
The unresolved issues following a hastily agreed Brexit agreement need to be addressed urgently to ensure that peace in Northern Ireland persists. Boris Johnson needs a solution to that problem to ease some of the pressures he is facing from his party.
The relations between the EU and Britain are even more strained than many had expected during the prolonged Brexit debate. Both sides now need to put the frustrating experience of dealing with the Northern Ireland trade issue behind them.
France takes over the rotating EU Council presidency in the first half of 2022. There is hope that it will succeed in making the motto it adopted – “Recovery, power, and belonging” – a reality.
Economic recovery will undoubtedly be the holy grail of all member states in 2022. Strong second and third goals will be a respected EU in the geopolitical sphere and an enhanced sense of belonging for all EU citizens.