Europe is entering a period of profound political turbulence, with nationalist parties gaining ground by tapping into widespread economic insecurity. The lesson from the recent US election, where Donald Trump's campaign successfully focused on bread-and-butter issues, is one that European capitals must urgently heed.
The High Stakes for Europe's Social Model
The continent faces a series of expensive, era-defining challenges. These include the ongoing war in Ukraine, sustaining the green transition, managing demographic change, and building economies resilient to pressure from powers like China and a potential future Trump administration. According to the Bruegel think tank in Brussels, this new age of geopolitical insecurity could demand an extra €250 billion in annual EU defence spending alone.
Furthermore, last year's report on European competitiveness by former Italian Prime Minister Mario Draghi called for massive investment in public goods and infrastructure, partially funded by joint EU debt. Such a fiscal shift could revive Europe's stagnant growth, but bold action on raising revenue remains elusive.
A Failure of Economic Boldness
At both national and EU levels, political courage is in short supply. So-called 'frugal' member states resist collective borrowing, and the bloc's seven-year budget proposals lack ambition. In France, a wealth tax on the super-rich enjoys overwhelming public support, yet President Emmanuel Macron's embattled government refuses to consider it, despite being desperate to reduce the budget deficit.
This timidity has a clear consequence: without progressive revenue-raising measures, the financial burden of adjustment will fall on the less well-off through austerity and deepening inequality. Recent bitter disputes over pension reforms in France and Germany highlight a growing struggle over the future of Europe's cherished social model.
The Populist Exploitation
This political vacuum is being expertly filled by nationalist parties. In the EU's Franco-German heart, Marine Le Pen's National Rally (RN) and the Alternative für Deutschland (AfD) lead polls, drawing significant support from blue-collar voters. These groups promote a politics of 'welfare chauvinism', promising to protect national benefits systems for native citizens.
For instance, Ms Le Pen's RN has vocally opposed raising the retirement age and stated it would target any social benefit cuts exclusively at non-French nationals. This strategy mirrors the disingenuous but effective pledges made by Donald Trump to protect blue-collar interests, which were later undermined by policies favouring the wealthy.
The warning from the US is stark. The post-mortem of Kamala Harris's presidential campaign suggested a failure to connect on core economic issues, as the focus remained on the threat to democracy. Without a fundamental change in economic approach that convincingly addresses the cost-of-living and security concerns of ordinary Europeans, the continent's social contract is at risk. Mainstream parties must craft a compelling progressive counteroffer, or they will continue to hand a potent political gift to the Trumpian forces already on the march.
