French President Emmanuel Macron has issued a warning that the European Union (EU) is facing significant risks in the next few years unless it implements drastic reforms. Speaking at a conference in Berlin, Macron highlighted the need for regulatory framework reform, increased investment, and addressing high social spending. He emphasized that the EU’s current economic model is unsustainable and without urgent action, it risks losing its competitive edge to global powers like China and the United States.
Macron stated that Europe must confront challenges such as persistent underinvestment in key sectors, rising regulatory burdens, and escalating social welfare costs. He called for a simplification shock to reform the EU’s regulatory framework which has become overly complex and rigid, stifling innovation and growth in sectors like artificial intelligence and defense.
The French leader also addressed concerns about the EU’s extensive social welfare system. Eurostat data shows that EU governments spent around $3.4 trillion or 19.5 percent of GDP on various social programs in 2022. Macron argued that this level of spending is not sustainable given growing risks to competitiveness.
Comparatively, while both the EU and the United States allocate similar amounts to social protection in dollar terms, the percentage of GDP spent by the EU on these programs is significantly higher due to its more extensive welfare systems.
Macron’s remarks align with a recent report by former European Central Bank President Mario Draghi which described Europe’s current economic strategy as an “existential challenge.” The report emphasized simplifying regulations, fostering innovation, and enhancing competitiveness as crucial reforms needed for Europe’s productivity growth.
Macron fully supports Draghi’s recommendations and believes adopting them urgently is essential for Europe to compete globally. Without these reforms, Macron warned that Europe could face irrelevance in an increasingly multipolar world order.
