An end to Eurosclerosis?

The German Chancellor and French President are living on borrowed time while the European Commission chief is failing to turn the page: is the EU’s “slow agony” fatal?

The European Union is in trouble and "muddling through," the time-honoured EU response to crises, simply won't be enough. It's not just that Europe is falling behind both the US and China economically; it's the politics, stupid!

Last week saw Ursula von der Leyen, as President, cobble together a Commission that reeks of second-raters and rotten compromises after she shafted Thierry Breton, the outgoing industrial strategy chief, and lost Margrethe Vestager, the competition chief, to "retirement." Both were controversial but stars: the two tend to go together.

VdL,  as she's known, presides over 26 colleagues united by one thing: overwhelming fealty to her. Her second 5-year mandate will be marked even more by the authoritarian approach she brought to her first - coupled with an inadequate, spluttering response to the permacrisis afflicting Europe.

France

Then, this weekend, we saw Michel Barnier, the new French premier, finally unveil his government - in time for the main evening news at 2000 on Saturday evening. It's a cabinet of largely unknowns and may have constitutional legitimacy but certainly little or no democratic legitimacy. The President, Emmanuel Macron, after colluding with vdL over Breton, has now executed a stitch-up with Barnier. It won't improve his approval ratings (-70%)...and may herald a hot winter on the streets.

At July's snap legislative elections that Macron called in reaction to the victory of the Far Right Rassemblement National (RN) at the European ones a month earlier, the New Popular Front (NPF) of hard and centre left saw off the RN, pushing it into third place in the second round behind the macroniste Ensemble (ENS). Barnier's Les Républicains (LR) limped in fourth with 8.6% and 48 seats in the 577-strong National Assembly to the NPF's 32.6& and 188 seats.

The Left (apart from one stray)  is expunged from the new government despite winning while the ENS gets the biggest reward - even though it and the LR cannot command a majority in the chambre des députés, leaving them reliant on RN support under Jordan Bardella and Marine Le Pen. Barnier has given them a huge nudge in this direction by choosing an anti-immigrant right-winger as interior minister.

Germany

Yesterday (September 22), the Social Democrats (SPD) held on ("dodged a bullet" according to Politico) in the federal state of Brandenburg and pushed the Hard Right Alternative für Deutschland (AfD) into second place: 30.9% v 29.2%. This was in no small part due to last-minute switching/tactical voting by supporters of "bourgeois" parties like the Christian Democrats (CDU) and Greens - both of which lost votes - in favour of the SPD to head off the AfD repeat victory (after Thuringia) opinion polls had predicted.

The SPD has held/shared power in Brandenburg, the region around Berlin with Potsdam as its capital, since unification 34 years ago; its outgoing premier, Dietmar Woidke, was immensely popular with approval ratings close to 60%. Unlike his boss, Olaf Scholz, the Chancellor, that he failed to mention once during the entire campaign. Even so, the AfD appears to have won a blocking minority which it can deploy to overturn laws/votes (on, say, judges) requiring a two-thirds majority. And the SPD may now have to go into coalition with BSW, the new hard left party taking its name from its founder Sahra Wagenknecht, which won an astonishing 13.5%.

Arguably, Scholz's goose is still cooked. Had he lost in Brandenburg, he could have been forced out along with his fractious coalition partners, the Greens and Liberals (FDP) a year ahead of the scheduled general election in September 2025. On current showing, the CDU under Friedrich Merz is a shoo-in to regain national power then - and the SPD may ditch Scholz as its candidate (Kanzlerkandidat) ahead of this likely dismal outcome.

Eurosclerosis

The "sclerotic" epithet to describe Europe's economy is commonplace - and used over the years. But there are genuine fears that the usual forces that give momentum to the Project (an integrated EU) will fail to deliver big time: the Franco-German locomotive has ground to a halt.

Politically, Macron and Scholz are running on near-empty. The French President is rumoured to be thinking of giving up (ahead of 2027) and it's far from certain his latest government will survive for long; Scholz as we've said is widely considered past his sell-by-date.

Even vdL is only superficially unassailable even if she lasts the full 5-year mandate. Several of her chosen commissioners may fall at the hands of MEPs during the upcoming approval hearings in the European Parliament. The economic/industrial agenda - AI/green transition/defence integration/Ukraine/foreign economic policy - may, more critically, simply defeat her and her lacklustre team.

France, meanwhile, is running a budget deficit almost twice as high as the EU-dictated ceiling of 3% and its new untested finance minister may be unable to deliver a budget by the October 30 deadline. Germany's once-lauded economic model, with manufacturing at its core, is proving incapable of grasping the scale of the required green and digital transition: it's too stiff, over-weighty, over-regulated, aged. The country's auto industry - in crisis talks with the economy minister Robert Habeck today (23/09) - symbolises that demise, with VW threatening multiple job losses and China "stealing" its once-mighty sectoral dominance.

Mario Draghi, former central banker turned technocratic premier, is warning the EU of a "slow agony" if it fails to invest in modernisation and catching-up on the US and China. That is no exaggeration. It means renewing not only the economy its political class and leadership to one that focuses on delivery, not radical surgery. Nor doom and gloom. A future that works for all…