Dear Readers,
The war in Iran remains a major headache for Europeans. It may be “not our war” (as Kaja Kallas put it), but its consequences certainly are. They are clearly visible at the petrol pump—and this may be only a foretaste of broader economic repercussions yet to come for all Europeans. It is therefore no surprise that both the conflict in Iran and economic concerns featured prominently on the agenda of last week’s EU summit. The overarching goal is clear: Europe’s economy must become more resilient so that the EU is less vulnerable to external shocks as quickly as possible.
One key lever in this effort is Europe’s budget. Negotiations over the next Multiannual Financial Framework (MFF) are already underway and will soon intensify. High time, then, for a comprehensive guide to this highly complex dossier. Lucas Guttenberg and Anna Heckhausen have done exactly that. Their paper, “The Devil is in the Budget,” is your go-to guide for understanding the upcoming MFF negotiations. The central challenge is that the next MFF will be negotiated under tight political and fiscal constraints with high expectations. The outcome will hinge on difficult trade-offs shaping the next seven years.
At the same time, Europe’s resilience will depend not only on its fiscal framework, but also on the strength of its trade and industrial policy toolbox. This is particularly evident in Europe’s response to what some call “China shock 2.0.” In her latest Handelsblatt op-ed, Daniela Schwarzer argues that Europe should strengthen its trade defence instruments, pursue a more assertive industrial policy—including through the proposed Industrial Accelerator Act—and reduce critical dependencies.
Ultimately, however, resilience must also be built at home. Europe’s first major asset remains the completion of the Single Market—“One Europe, One Market,” as the European Council conclusions put it. In this context, the Commission has recently presented its proposal for a so-called 28th regime for company formation, branded “EU Inc.” In this post, our Single Market expert Claudia-Dominique Geiser explains what truly matters for the 28th regime, and why it would make sense to begin with regulatory pilots.
And speaking of resilience starting at home, this mapping of societal preparedness by Helena Quis and Lena Schmalhorst highlights, through a number of flagship examples, the extent to which capabilities in civil defence already exist across Member States. That is certainly encouraging.
With that in mind, best regards,
Malte Zabel
Director, Europe’s Future Programme
