Europe is in deep trouble. Since its creation in 1993, the EU has staggered from one crisis to another, falling behind the US and China in stimulating economic growth.
The UK left the union hoping that Brexit would rekindle its greatness prospects. Polish Prime Minister Donald Tusk correctly argues that Europe is in a “spiritual crisis” of a “palpable mood of uncertainty, of loss”. So, what is behind this socio-economic decline and will 2025 be Europe’s annus horribilis?
The risks that Europe faces are easy to identify. The EU’s eastern borders are under attack from Russian nihilism. The southern borders continue to be threatened by illegal migration despite expensive deals with North African countries. The UK continues to be unable to control immigration across the channel.
Relations with the US are at an all-time low as Europe continues to outsource its defence to its transatlantic partner. President Trump will soon announce vindictive trade tariffs against EU businesses as he did against Canada and Mexico.
China is fast becoming more expansionist, with ambitions to become an authoritarian superpower and an economic juggernaut. The economic motors of the EU – Germany and France – are misfiring, with Macron and Scholz now labelled as lame-duck political leaders. Ursula von der Leyen, a career bureaucrat and president of the European Commission, lacks clout despite her mellifluous political rhetoric. Ukraine’s president, Volodymyr Zelensky, correctly argues that Europe must “learn to take care of itself”.
Von der Leyen, for once, encapsulated what is wrong with Europe. When launching the 'Competitiveness Compass' policy document recently, she argued: “Our business model has basically relied on cheap labour from China, cheap energy from Russia, and partially outsourcing security and security investment. These days are gone.”
The Competitiveness Compass adds more clichés to the EU’s communications rhetoric. Besides the much-abused “road map”, we now hear about a “compass” and a “Savings and Investment Union”. The sad realities are that the EU and the UK lack competitiveness and capital investment amid high levels of debt and a declining working-age population.
To avoid 2025 becoming Europe’s annus horribilis, there is a need for quality and unity in political leadership. So far, this looks like an unlikely prospect
Europe struggles to keep pace with developments in artificial intelligence and new technologies. Irregular migration and its effect on ordinary people’s lives are bringing hard-right populist parties to the fore, from Slovakia to Italy, Austria, Spain, the UK, and now even France and Germany.
To avoid 2025 becoming Europe’s annus horribilis, there is a need for quality and unity in political leadership. So far, this looks like an unlikely prospect. According to opinion polls, public support for the EU is still strong, possibly because many consider the alternative, a fragmented Europe, a worse option.
Von der Leyen’s Competitiveness Compass is a high-level blueprint that should put the EU’s economic strategies on the right trajectory. The message is unequivocal, if vague. Europe must become more business-friendly to match the US and China without sacrificing its climate goals in the process. Despite pious external shows of unity in the EU leadership, member states live in a Tower of Babel bubble where everyone tries to prioritise national interests at the cost of united, decisive leadership.
One worrying socio-economic fact highlighted in the compass is the decline in the educational achievement of European students in mathematics. This skill is universally considered essential for promoting innovation in growth industries.
According to an OECD research study, the rate of students who displayed below-basic proficiency levels in mathematics increased across the board between 2015 and 2022. Malta occupied one of the lowest rankings, with 32.6 per cent of students falling in this category.
The compass targets a war against bureaucracy, a favourite political punching bag and an often ineffective medicine for profound economic illnesses. Von der Leyen could have been much more effective had she set an example by slimming down the EU bureaucracy.
A good first step would be to cut the size of the European Parliament. The US House of Representatives has 435 members serving 50 states and 341 million citizens. The European Parliament, with far less political power, has 720 members from 27 member states representing 449 million people. Can the EU afford to keep the most expensive talking shop in the Western world? Of course, do not expect any political leader to support such a proposal that would harm the “national interest”.
In the coming months, expect more political flip-flopping, doublespeak, ‘new’ strategy announcements, consultations, photo opportunities for political leaders, and more talk about sustainability and resilience.
Sadly, it is most unlikely we will see significant game-changing shifts in how Europe is managed.