EU Institutions & Policy-Making

Russia’s invasion of Ukraine has raised the question of whether the issue of external border security and defense needs to be more closely integrated within the European Union. Many proposals are under discussion aimed at assigning the EU with tasks that are currently performed at national level. Most EU members have increased their defense spending in the past year or plan to do so soon. However, whether an EU defense union is politically achievable remains controversial. It entails additional costs and ‒ even more importantly ‒ the member states would have to give up some of their sovereignty. The project is linked to the plan to build a robust and efficient defense industry. This is because European arms production has so far suffered from national fragmentation and chronic underfunding.

Companies in the EU spend much less on R&D than their competitors in the US and focus their innovation activities on mid-tech rather than high-tech sectors (IT hard-ware, software, biotechnology, pharmaceuticals). Reforms of EU innovation policy are necessary to avoid the “mid-tech trap,” i.e., the traditional dominance of the same companies, especially from the automotive sector.

In the new legislative period, the EU Commission will need a well-thought-out economic policy agenda to respond to the changed geopolitical challenges and to strengthen its competitiveness. This policy brief analyzes the main economic challenges ahead.

Over the past decade, crises have shaped public perceptions of the EU. Despite the rise of EU-critical parties, the EU and its institutions still enjoy higher levels of trust than national governments.

Europe ‒ once a leader in industrial development and innovation ‒ has lost its competitiveness. Which place will it take in a new world order? Climate protection and the digital transformation will also influence the next era of prosperity. The EU and its member states now want to build a robust, secure, resilient, and sustainable economy. Meanwhile, the US, China, and some emerging economies have overtaken the EU in many international rankings.