Employees of carmaker Ford demonstrate for a 7% pay rise during a strike called by metalworkers’ union IG Metall in Cologne, Germany, October 29, 2024. INA FASSBENDER / AFPA weakened Europe is anxiously awaiting the outcome of the American elections held on Tuesday, November 5. Under Joe Biden’s presidency, the economic gap between Europe and the United States has widened. Mario Draghi, the former president of the European Central Bank (2011-2019), warned on September 9, as he presented his report on Europe’s competitiveness, that if the European Union does not invest massively in clean technologies and digital technology, it is condemned to a “slow agony.”
If the EU is to effectively address this “existential challenge,” as he described it, Draghi says that the EU needs to invest an additional €800 billion a year. That amount is three times more than the Marshall Plan allocated for the reconstruction of Europe after the Second World War. However, such a plan can only be achieved if the 27 member states demonstrate a common will and work together. The challenge lies in how to accomplish it at a time when political paralysis has taken hold of the eurozone’s two driving forces, Germany and France.
In Germany, Social Democrat Olaf Scholz’s coalition is on the verge of collapse. Scholz has never succeeded in imposing his leadership in Europe and the government is struggling to agree on the 2025 budget. Additionally, there is growing pressure from employers to relax the constitutional principle of the “debt brake” in order to enhance public investment. The weakness of Scholz’s tripartite coalition has led to the possibility of early parliamentary elections, before the scheduled date of September 28, 2025. Given Germany’s significant economic influence, which alone accounts for a quarter of the Eurozone’s gross domestic product and facing the prospect of a recession for the second year running, such political uncertainty is a weakening factor for the EU as a whole.
In France, the situation is no more stable. The dissolution of the Assemblée Nationale in June led to the formation of a government that already appears to be in agony before it has even begun to act. With no majority, Prime Minister Michel Barnier has no real room for maneuver, as demonstrated by the chaotic budgetary debate in the Assemblée Nationale, set against a backdrop of spiraling public finances. While the impossibility of another dissolution until June 2025 guarantees a temporary status quo, the consequences are already being felt. The hasty and misunderstood call for snap legislative elections has considerably reduced Emmanuel Macron’s capacity for diplomatic influence, particularly on the European stage – a role he had actively sought when he took office in 2017.
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