What a year!

Europe’s reckoning in a new and unpleasant world.

The end-of-year Bureau conversation was devoted to a look back on a turbulent past 12 months marked by intense geopolitical shifts where the existing US-led world order felt increasingly hollowed out. Long-held assumptions about European security and prosperity are breaking down, forcing urgent, transformative decisions on defence, economics and Europe’s place in a multi-polar world. Thus, a moment of reckoning has come for Europe in what Mario Draghi has dubbed a “brutal wake-up call. Against that background, and out of curiosity, participants in the Bureau conversation had agreed beforehand to start from an AI generated kick-off statement on “Europe’s reckoning”.

This is what the AI has come up with:

In 2025, the term "Europe's reckoning" refers to an interlocking series of existential crises—geopolitical, economic, and demographic—that are forcing a fundamental reassessment of the European Union's future and its role on the global stage.

Geopolitical and Strategic Reckoning

Transatlantic Fraying: The re-election of Donald Trump has accelerated a shift in U.S. priorities away from Europe toward the Indo-Pacific and domestic concerns. Leaders like Ursula von der Leyen have noted that "the West as we knew it no longer exists," pressuring Europe to move toward "strategic autonomy" rather than relying on the U.S. nuclear and military umbrella.

Ukraine and Russia: Europe is facing the prospect of managing the security of its borders independently from what was seen as a guaranteed US security cover. This includes increasing defence spending to 3% of GDP and potentially establishing a European nuclear deterrent.

Germany’s Shift: Following the February 2025 elections, Germany—under new leadership by Friedrich Merz—is undergoing a "strategic reckoning," dismantling its "debt brake" to invest heavily in rearmament and European leadership.

Economic and Industrial Reckoning

China Trade Conflict: Relations with China have reached a "collision course" due to trade imbalances Macron has called "unbearable". The EU is preparing measures to protect industries and jobs, as economists estimate that a third of euro-area employment (over 50 million jobs) could be affected by Chinese exports through 2029.

AI and Productivity Gap: Europe faces a productivity crisis; the average European worker now produces only 76% as much as their American counterpart. A massive push for AI adoption, particularly among small and medium-sized firms, is seen as the only way to avoid long-term economic irrelevance.

Sovereign Debt Risks: High baseline debt (e.g., France at 114% of GDP) and persistent deficits in major economies have created a "fiscal red zone". Analysts warn of a potential sovereign debt crisis centred in Europe if a global recession occurs in 2025.

Societal and Climate Reckoning

Demographic Challenges: Declining fertility and aging populations are causing labour shortages and fiscal strain, leading to a "demographic reckoning" regarding the necessity of immigration vs. automation.

Climate Ambition: In late 2025, the EU faced a "day of reckoning" for its 2040 climate targets. After intense negotiations, a 90% CO2 reduction target was sealed but included major carveouts for national industries, reflecting deep internal divisions.

Rise of the Far-Right: Continued economic stagnation and migration issues have fuelled a "post-liberal reckoning," manifesting in the rise of far-right populist movements across the continent. The war in Ukraine and other crises have exposed deep internal divisions, prompting debates on EU enlargement, national identity, and a new European social contract.

Participants felt that the AI response has met their broad expectations in the sense that it has more or less correctly identified the crucial challenges, while missing out on important nuances and essential details, at the same time completely failing in developing pointers to a possible forward strategy.  Zooming in on how to handle this new era, many participants lamented that European leaders have not lived up to the challenge to set up the continent on a new path to security and prosperity in this new unpleasant world. Instead, as was critically noted, they have kept their heads down and tried to flatter and ingratiate themselves to Donal Trump, while making little progress in moving towards strategic autonomy goals in any meaningful way. Others were less pessimistic arguing that accommodation rather than outright confrontation is preferable, and in any case necessary, if only to buy some time to put the continent’s strategic foundation on entirely new pillars. Participants agreed that the recommendations of the Draghi report provide a clear agenda to strengthen Europe’s resilience and competitiveness, but many were worried about the slow speed of implementation. Erratic US policies, economic warfare and financial instabilities were considered to pose the biggest risks looming ahead, calling for robust albeit inevitably incomplete hedging strategies.