The Great Unravelling

The European Union enters the mid-2020s as the world reorganises itself around power blocs and long-term strategy. Europe, one can’t escape concluding, finds itself preoccupied with following protocol and maintaining brittle coalitions.

The June 2024 European Parliament elections crystallised the shift. Far-right and hard-right parties expanded their footprint, reshaping the centre of gravity in Brussels and national capitals alike. In France and Germany, governing parties were humbled; across the bloc, roughly a quarter of MEPs now sit in far-right groups, narrowing room for grand bargains in climate, migration, and industrial policy.

In Search of a Strategy

National politics reinforce the trend. Italy’s government under Giorgia Meloni has adopted a tougher line on migration and clashed with Brussels over rule-of-law concerns; the European Parliament’s watchdogs have stepped up scrutiny of Italy’s democratic standards, and rights groups warn about executive overreach.

Hungary, meanwhile, continues to wield veto power as it threatens to block budget deals while facing withheld EU funds over rule-of-law deficits and fresh criticism for restrictive social legislation. The Netherlands offered a case study in volatility: a right-wing coalition formed in 2024 collapsed within a year amid disputes centred on migration, underscoring the fragility of coalition governance on the continent.

On policy, Brussels can point to real achievements—but also to stalemates, rollbacks, and litigation that saps it of any momentum it might have. After four years of negotiation, the Pact on Migration and Asylum finally cleared Parliament and Council in spring 2024, a headline reform meant to standardise border procedures and share responsibility. Yet implementation is already torn between a desire for deterrence and legal constraints, as capitals test ‘externalisation’ schemes that push asylum processing beyond EU borders.

Italy’s offshoring deal with Albania and newer proposals echoing the UK’s defunct Rwanda model face mounting judicial and political hurdles.

Agriculture shows the same pattern: policy by emergency derogation. Farmer protests from Paris to Warsaw forced rapid rewrites of green conditions under the Common Agricultural Policy, with targeted CAP amendments and loosened environmental rules introduced in 2024 to defuse unrest. Short-term relief came at the price of longer-term credibility for the EU’s climate ambitions.

Climate, too, has veered from ‘whatever it takes’ to ‘whatever survives.’ The landmark Nature Restoration Law did ultimately pass in June 2024 after months of negotiations, but subsequent political pressure has pushed the Commission to dilute or ‘simplify’ parts of the Green Deal’s corporate reporting and due-diligence pillars—moves welcomed by some industries yet criticised by investors and climate advocates as a step back from strategic clarity.

Process-obsessed

Europe’s institutions are not so much powerless as bereft of credibility. Public trust is not collapsing wholesale—indeed, Eurobarometer finds trust in the EU at its highest since 2007—but this rise coexists with a perception that the bloc is hyper-normative and slow to decide.

The optics don’t help: the EU’s legislative machine remains prodigious, with tens of thousands of regulations and decisions accumulated over decades and a steady flow of new acts each month. To businesses and voters alike, the signal is more rules, which does not automatically mean a clearer direction.

Meanwhile, outside Europe fast developments are happening everywhere. The United States and China continue to set the pace in industrial policy, technology, and security. The EU’s answer—Global Gateway—has begun to assemble a portfolio of projects but still pales next to China’s Belt and Road in scale and brand recognition, leaving Europe struggling to project economic statecraft.

On defence, the war in Ukraine has finally nudged many European capitals toward higher spending, and a record number of NATO allies now meet or are near the 2% benchmark. Yet capability gaps and coordination problems persist, raising questions about Europe’s strategic weight if US security guarantees become less certain.

Economically, the ground is shifting under Europe’s feet. The EU’s share of global GDP has declined over the past two decades as China’s rose and the US regained ground—an uncomfortable backdrop for a continent that relies on market size and regulatory gravity for influence.

The World Bank and IMF datasets chart the trend clearly, while the Draghi report warns that without bold steps to deepen the single market, de-risk supply chains and mobilise investment, Europe will keep losing its competitiveness.

Regaining Purpose

All of this feeds into a paradox. Europe is becoming ever more rule-bound, even as its ability to set the rules for others diminishes. The machinery of consultation, impact assessments and trilogues is designed to reconcile the interests of 27 democracies; it is not built for an age defined by sanctions regimes, export controls, and defence surges. Brussels has recognised the problem—launching a ‘simplification’ agenda and floating a 2040 climate target while promising less bureaucracy for firms—but the follow-through remains contested, and back-and-forth changes make it harder to plan for the long term.

What would it take to reverse this process? First, a genuine migration settlement that is legally durable and politically defensible—ending the cycle of symbolic crackdowns struck down by courts. Second, a Green Deal 2.0 that pairs investment and competitiveness with climate credibility, avoiding the whiplash of rule-tightening and rule-loosening. Third, a defence-industrial compact that turns rising budgets into interoperable capabilities at scale. None of these require abandoning Europe’s consensus culture; but purpose must transcend the process.

The EU has been able to surprise before—uniting the banks union under duress, joint borrowing in a pandemic, rapid sanctions after Russia’s invasion. But those were moves made in an emergency. The challenge now is strategic: to shift from regulatory maximalism to geopolitical minimalism—deciding what truly matters, then turning it into policy that can be executed. In a world of power blocs and tough negotiations, Europe must show it can still do more than referee itself.

Statement

Europe enters the mid-2020s caught between its penchant for endless rule-making and waning strategic influence. The 2024 EU elections boosted far-right blocs, constraining climate, migration, and industrial policy. Achievements like the migration pact or Nature Restoration Law pass in diluted form, as short-term concessions sap long-term credibility. Meanwhile, the US and China surge ahead in tech, industry, and security, exposing Europe’s economic drift. Without decisive migration, climate, and defence compacts, the EU risks mastering procedure while forfeiting power in a world that prizes execution over deliberation.