This was supposed to be an EU summit about the EU’s long-term budget. But things are never easy for EU leaders, and world events have a nasty habit of making their way onto the itinerary. That meant this European Council had a lot more on the agenda than the last handful of summits, at least: Energy, migration, enlargement, Ukraine, and more besides were covered — and very little, if anything, was decided. Have FOMO because you weren’t there? Don’t worry, we’ve got you covered. Here’s POLITICO’s rapid roundup of what we learned at the European Council. 1) ENERGY STOLE THE SHOW RIGHT OUT OF THE GATE The summit’s first major clash came Thursday morning, with EU leaders split over whether to delay ETS2, the bloc’s second phase of carbon pricing, to address high energy prices, triggering a three-hour-long standoff. Italy and Greece joined the Visegrád Four — Czechia, Hungary, Poland and Slovakia — in calling for a delay, a push rejected by the majority of countries. The debate dragged on, delaying lunch (spare a thought for our hungry leaders!) and leading to the cancellation of a press conference on Thursday night. 2) BUDGET NEGOTIATIONS ARE A MARATHON… Negotiations on the bloc’s next long-term budget were expected to be one of the summit’s most contentious topics. But they were a nothingburger, with most leaders repeating positions they have held for months. The summit brought them no closer to a breakthrough. Many countries, of course, want a smaller budget, with Swedish Prime Minister Ulf Kristersson telling reporters that his country is “not an ATM for the EU.” Belgian Prime Minister Bart De Wever, meanwhile, said he had no choice but to be frugal at the European level, arguing he is used to tightening his belt at home because his wife is Dutch. Think of Bart next time your Dutch friends ask you to pay them back for that coffee. 3) … AND A SPRINT European Council President António Costa is still aiming to get a budget deal before the end of the year, according to two EU officials. He announced that leaders will hold a special summit at the end of November to try and make progress (and there’s a December summit too). But that timing leaves them up against the clock to reach a deal by year’s end. See you all back here on Nov. 26! 4) EU LEADERS MAY NEED TO BRING EXTRA LUGGAGE NEXT TIME If leaders do hope to agree on the EU’s long-term budget this year, they should prepare for long negotiations in November and December. German Chancellor Friedrich Merz suggested the pre-Christmas summit could last longer than the scheduled two days. “For the December summit, we should pack a few more shirts than usual,” he said. Gulp! 5) YOUR NEXT HOLIDAY TO CYPRUS MIGHT BE A LITTLE EASIER Cypriot President Nikos Christodoulides told reporters he hopes EU leaders will discuss his country’s bid to join the Schengen travel zone at the December summit. “All technical preparations have already been completed, and we hope that the matter will be discussed by the relevant council in December so that the final political decisions can be made,” he said. 6) ROSE-COLORED GLASSES HAVE COME OFF WHEN IT COMES TO COSTA European Council President António Costa drew the ire of some leaders over his handling of negotiations to curb high energy prices, which had become a “mess,” three EU diplomats told POLITICO, with another two diplomats saying that leaders were fuming at Costa for allowing talks to go off the rails. 7) DRINK (A LITTLE) LESS BEER TO HELP UKRAINE Ahead of the summit, Latvian Prime Minister Andris Kulbergs told reporters that supporting Ukraine costs each European the equivalent of one beer a year. “That one beer is just a cost [for EU citizens]. There, it’s a cost of life. We drink less, their lives are saved,” he said. “Simple as that.” He didn’t say whether he meant a beer bought in Stockholm or Prague. As anyone in Belgium knows, not all beers are created equal — or cost the same. 8) THE EU PARLIAMENT WANTS YOU TO KNOW IT MATTERS TOO The European Parliament’s two lead negotiators on the EU budget made the rounds of the press room to make sure journalists heard their views. Siegfried Mureșan (of the European People’s Party) and Carla Tavares (Socialists and Democrats) both stressed that the Parliament’s position is important. Meanwhile, European Parliament President Roberta Metsola joined leaders for the first part of the summit. Metsola said she had made it clear to them that “the Parliament is not a rubber-stamp and never will be.” 9) TALKING CHINA (WITHOUT MENTIONING CHINA) Leaders discussed trade imbalances (read: China) over lunch on Thursday and welcomed the deal the European Commission struck with China last week to curb imports of Chinese hybrid vehicles. Czech PM Andrej Babiš even went so far as to call the deal “fantastic.” POLITICO scooped that the European Commission is expected to work on trade measures tackling imports of chemicals and industrial machinery in an effort to protect European industry from unfair Chinese competition. 10) NEW BROMANCE BREWING Hungarian PM Peter Magyar posted a late-night selfie with Dutch PM Rob Jetten on social media after day one of the summit. The two were all smiles and “tired, but not sad”, as Magyar put it in his tweet. In reaction to the tweet, Jetten told reporters, “We are more or less of the same generation and a tad more direct and pragmatic than some colleagues in the European Council, so there’s a click.” > We started at 7:30 this morning in Brussels. The second shift begins after 10 > PM, with Dutch Prime Minister Rob Jetten @MinPres. > Tired, but not sad. pic.twitter.com/dmtSMbqG4m > > — Magyar Péter (Ne féljetek) (@magyarpeterMP) October 15, 2026 11) BACK TO THE CASTLE António Costa announced that another competitiveness summit at Alden Biesen castle in the Belgian countryside will take place in February 2027, three EU diplomats told POLITICO. Leaders already visited the castle earlier this year, and they clearly loved the Belgian countryside so much they want to return (or Costa is forcing them to go). 12) STILL REELING FROM CEUTA Ahead of Friday’s talks, 16 EU leaders met to discuss migration over breakfast (before discussing migration over lunch with everyone else). According to one EU diplomat, leaders broadly agreed that the EU should be able to suspend asylum applications when faced with a sudden influx of migrants that may have been engineered on purpose. But would that mean the EU will implement pushbacks (which are banned under EU law)? 13) DENMARK, ITALY AND POLAND WANT TO BE TOUGHER ON MIGRATION The three leaders joined forces to argue that migration is a concern for many EU citizens and is contributing to rising crime rates. That caused a delay to an already shockingly long summit. 14) THERE WERE SOME AGREEMENTS Italy’s Giorgia Meloni and Spain’s Pedro Sánchez found some time on the sidelines of the summit to chat about Rome’s restrictions on Spanish nationals sparked by the Ceuta crisis. Plus, France and Germany said they had struck a deal to favor European-made cars under the Industrial Accelerator Act in exchange for weakening a 2035 vehicle emissions target, ending months of wrangling between the bloc’s two biggest economies. 15) EU LEADERS GET THE GOOD STUFF TO EAT Thursday’s lunch menu featured a “full-flavored vegetable jus.” Not a little flavor, not a medium amount of flavor, but the full flavor. Then on Friday there was a “rich jus”. There was also a Champagne sauce. Only the best for our leaders! 16) THE SAME CAN’T BE SAID FOR REPORTERS Some POLITICO journalists lamented the lack of vegetarian options at the Council canteen. Pray for us. 17) NO HARSH WORDS FROM EU TO ZELENSKYY At a press conference on Friday afternoon, Volodymyr Zelenskyy was asked whether EU leaders had expressed annoyance at his recent tone toward U.S. President Donald Trump. The question followed reports that some capitals were frustrated with him and worried he was further riling the White House. But it was all love from Zelenskyy, who said there had been no harsh words during his time in the summit room. “I heard from my European colleagues support and only support, and I’m grateful for this,” he said. 18) NO HUGS FOR FICO As Zelenskyy entered the European Council building, he was seen hugging and kissing fellow leaders — with one exception: Slovakia’s Prime Minister Robert Fico received no hug. That may well have been because Slovakia is preparing to revive a dormant cooperation forum with Moscow. 19) 20M UKRAINIANS COULD FLEE TO EUROPE IF RUSSIA WINS WAR Zelenskyy issued a stark warning to Europe: if Russia wins the war, as many as 20 million Ukrainians could be forced to flee to Europe. Over 4 million Ukrainians already live in EU countries under temporary protection status, according to Eurostat.  20) EU LEADERS HAVE FORGOTTEN ABOUT BRITAIN … OR HAVE THEY? There was plenty of talk across the Channel this week about the U.K. potentially rejoining the bloc, but the subject did not come up at the summit, even with an EU-U.K. summit due next month. EU leaders have more pressing issues on their minds. Still, some had things to say about the U.K.’s relationship with the EU. Foreign policy chief Kaja Kallas said “all our friends are welcome to join,” naming Britain alongside Canada, Norway and Iceland as partners seeking closer ties. Latvian Prime Minister Andris Kulbergs suggested the U.K. “should come back to the family,” although he also said that Russia “had its hands on Brexit.” 21) AT POLITICO, WE SAVE THE BEST FOR LAST Covering European Councils often involves a lot of waiting around, but during this summit conditions were a little tougher because of a phantom farter among reporters waiting for Zelenskyy’s press conference. POLITICO went viral in Brussels’ diplomatic and journalistic circles for reporting the hard facts on our live blog. While this summit’s agenda was packed, in the end not many concrete decisions were taken. Some might say the summit was a load of hot air.

BRUSSELS — France and Germany said Friday they had struck a deal to favor European-made cars under a landmark EU industry bill in exchange for weakening a 2035 vehicle emissions target, ending months of wrangling between the bloc’s two biggest economies. Under the agreement, Germany would accept stricter “Made in Europe” — or local content — requirements for the automotive industry in the proposed Industrial Accelerator Act, a longstanding French demand, while France would back Berlin’s push to relax the EU’s plan to phase out new combustion-engine cars. The EU’s current target is for companies to reduce emissions from new vehicles by 100% from 2021 levels by 2035, with the possibility to “earn” 10% of emissions leeway through initiatives like offsets and investments. France and Germany now want to soften the 2035 target to 90% but without having  to offer investments in alternative fuels to compensate the remaining 10%, as proposed by the European Commission. “This balanced approach will enable the European Union to pursue its climate objectives while strengthening the technological sovereignty, industrial base and international competitiveness of its automotive industry,” the two countries said in a joint statement. The agreement, first reported by POLITICO in July, was due to have been announced Thursday, during a meeting of EU leaders in Brussels. But it was held up at the last minute by disagreements within Germany’s governing coalition. “We hope that this Franco-German dynamic can swiftly lead to an agreement with our partners, for our jobs and our industry,” French President Emmanuel Macron said in a post on social media. An Elysée official on Friday made clear that, under the Franco-German deal, the scope of Made in Europe for automotive can be extended to the U.K. and Switzerland under certain conditions. — addressing a key concern of Prime Minister Andy Burnham’s government ahead of a Nov. 20 U.K.-EU summit in Brussels. The agreement was reached after the German Social Democratic Party, the junior partner in Chancellor Friedrich Merz’s coalition government, dropped its opposition. “This is a modern realignment of German industrial policy that places significantly greater emphasis on preserving jobs and production sites,” said German Environment Minister Carsten Schneider, who is from the SPD. “The clear expectation for German companies is that they will use these new opportunities to make investments and guarantee jobs here in Germany,” he added. CORRECTION: This article was updated on Oct. 16 after an earlier version misrepresented the figures in the Franco-German proposal on the softening of 2035 targets.

The UK has historically been a global leader in life sciences innovation, but recent statistics paint a worrying picture for medicines access. The right policy can start to reverse this. We are living in a time where the intersection between breakthrough science, technology and data insights has the potential to transform treatment options for some of the toughest health conditions faced by patients in the UK. The UK has long played a central role in driving innovation when it comes to healthcare, and at Johnson & Johnson (J&J) we were pleased to see some positive signs from the Government at the end of 2025, illustrating an intent to reverse a decade of decline of investment in how the UK values innovative treatments. It was a positive first step, but now the real work begins to enable us to deliver the best possible outcomes for UK patients. To achieve this, our focus must be on ensuring our health system is set up to match the pace and gain the benefits of innovation that science provides. We need a supportive medicines environment that fully fosters growth, because even the most pioneering drugs and therapies are only valuable if they can be accessed by patients when they need them most. > even the most pioneering drugs and therapies are only valuable if they can be > accessed by patients when they need them most. At J&J, we are proud to have been part of the UK’s health innovation story for more than a century. We believe that turning ambition into delivery requires a clearer focus on the foundations that enable innovation to reach patients. We have had a substantial and long-term economic presence, with our expertise serving as the grounds for successful partnerships with patients, healthcare providers, clinical researchers and the NHS. Recent national developments are a step in the right direction The UK Government’s recent announcements on the life sciences industry are an important move to help address concerns around medicines access, innovation and the UK’s international standing. This includes a welcome planned increase to the baseline cost-effectiveness threshold (the first change to be made since its introduction in the early 2000s). While it is crucial to get this implemented properly, this seems like a step in the right direction — providing a starting point towards meaningful policy reform, industry partnership and progress for patients. The true impact of stifling medicine innovation in the UK compared with our peers These positive developments come at a critical time, but they do not fix everything. Over the past decade, spending on branded medicines has fallen in real terms, even as the NHS budget has grown by a third.[i] Years of cost-containment have left the UK health system ill-prepared for the health challenges of today, with short-term savings creating long-term consequences. Right now, access to innovative medicines in the UK lags behind almost every major European country[ii]; the UK ranks 16th and 18th among 19 comparable countries for preventable and treatable causes of mortality.[iii]These are conditions for which effective medicines already exist. Even when new medicines are approved, access is often restricted. One year after launch, usage of innovative treatments in England is just over half the average of comparator countries such as France, Germany and Spain.[iv] The effect is that people living with cancer, autoimmune conditions and rare diseases wait longer to access therapies that are already transforming lives elsewhere in Europe. And even at its new level, the UK’s Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) clawback rate remains higher than in comparable countries.[v] J&J is committed to working together to develop a new pricing and access framework that is stable, predictable and internationally competitive — enabling the UK to regain its position as a leading destination for life sciences. Seeing the value of health and medicines investment as a catalyst for prosperity and growth Timely access to the right treatment achieves two things; it keeps people healthy and prevents disease worsening so they can participate in society and a thriving economy. New research from the WifOR Institute, funded by J&J, shows that countries that allocate more resources to health — especially when combined with a skilled workforce and strong infrastructure — consistently achieve better outcomes.[vi] > Timely access to the right treatment achieves two things; it keeps people > healthy and prevents disease worsening so they can participate in society and > a thriving economy. The UK Government’s recent recognition of the need for long-term change, setting out plans to increase investment in new medicines from 0.3 percent of GDP to 0.6 percent over the next 10 years is positive. It signals a move towards seeing health as one of our smartest long-term investments, underpinning the UK’s international competitiveness by beginning to bring us nearer to the levels in other major European countries. This mindset shift is critical to getting medicines to patients, and the life sciences ecosystem, including the pharmaceutical sector as a cornerstone, plays a pivotal role. It operates as a virtuous cycle — driven by the generation, production, investment in, access to and uptake of innovation. Exciting scientific developments and evolving treatment pathways mean that we have an opportunity to review the structures around medicines reimbursement to ensure they remain sustainable, competitive and responsive. At J&J, we have the knowledge and heritage to work hand-in-hand with the Government and all partners to achieve this. Together, we can realise the potential of medicine innovation in the UK Patients have the right to expect that science and innovation will reach them when they need it. Innovative treatments can be transformative for patients, meaning an improved quality of life or more precious time with loved ones. We fully support the Government’s ambitions for life sciences and the health of the nation. Now is the moment to deliver meaningful change — the NHS, Government and all system partners, including J&J, must look at what valuing innovation actually means when it comes to modernising the frameworks and mechanisms that support access and uptake. Practical ways to do this include: * Establishing a new pricing and access framework that is stable, predictable and internationally competitive. * Evolving medicines appraisal methods and processes, to deliver on the commitments of the UK-US Economic Prosperity Deal. * Adapting thresholds and value frameworks to ensure they are fit for the future — in the context of wider system pressures, including inflation, and the evolution of medical innovation requiring new approaches to assessment and access. > the NHS, Government and all system partners, including J&J, must look at what > valuing innovation actually means when it comes to modernising the frameworks > and mechanisms that support access and uptake. By truly recognising the value of health as an investment, rather than as a cost, we can return the UK to a more competitive position. The direction of travel is positive. At J&J, we stand ready to work in partnership to help ensure the UK is once again the best place in the world to research, develop and access medicines. Follow Johnson & Johnson Innovative Medicine UK on LinkedIn for updates on our business, our people and our community. CP-562703 | January 2026 -------------------------------------------------------------------------------- [i] House of Commons Library (2026). ‘NHS Funding and Expenditure’ Research Briefing. Available at: https://commonslibrary.parliament.uk/research-briefings/sn00724/ (Accessed January 2026). [ii] IQVIA & EFPIA (2025). EFPIA Patients W.A.I.T Indicator 2024 Survey. Available at: https://efpia.eu/media/oeganukm/efpia-patients-wait-indicator-2024-final-110425.pdf. (Accessed January 2026) [iii] The Kings Fund (2022). ‘How does the NHS compare to the health care systems of other countries?’ Available at: https://www.kingsfund.org.uk/insight-and-analysis/reports/nhs-compare-health-care-systems-other-countries (Accessed January 2026) [iv] Office for Life Sciences (2024). Life sciences competitiveness indicators 2024: summary. Available at: https://www.gov.uk/government/publications/life-sciences-sector-data-2024/life-sciences-competitiveness-indicators-2024-summary (Accessed January 2026). [v] ABPI. VPAG payment rate for newer medicines will be 14.5% in 2026. December 2025. Available at: https://www.abpi.org.uk/media/news/2025/december/vpag-payment-rate-for-newer-medicines-will-be-145-in-2026/. (Accessed January 2026). [vi] WifOR Institute (2025). Healthy Returns: A Catalyst for Economic Growth and Resilience. Available at: https://www.wifor.com/en/download/healthy-returns-a-catalyst-for-economic-growth-and-resilience/?wpdmdl=360794&refresh=6942abe7a7f511765977063. (Accessed January 2026).

BRUSSELS — EU countries shouldn’t be afraid of integrating at different speeds if that’s what it takes to gain crucial leverage on the world stage, Mario Draghi said Monday. “We must take the steps that are currently possible, with the partners who are actually willing, in the domains where progress can currently be made,” said the former European Central Bank president and ex-prime minister of Italy during a ceremony at the University of Leuven in Belgium, where he was awarded an honorary doctorate. “Power requires Europe to move from confederation to federation,” said Draghi, stressing that only in domains where EU countries have pooled their competences has the bloc gained clout on the global stage.  “Where Europe has federated, [such as] on trade, on competition, on the single market, on monetary policy, we are respected as a power and negotiate as one,” he said, citing trade agreements recently negotiated with India and Latin America. Draghi’s call comes as Europe struggles to keep pace with the U.S. and China, and is facing Russian aggression in Ukraine plus a transatlantic ally that no longer acknowledges the benefits of its historic European ties. “This is a future in which Europe risks becoming subordinated, divided and de-industrialized at once, and a Europe that cannot defend its interests will not preserve its values for longer,” Draghi warned. In the face of those challenges, areas of weakness are those where EU capitals continue to maintain a grip, such as defense, industrial policy or foreign affairs, Draghi said. In these, he added, “we are treated as a loose assembly of middle-sized states to be divided and dealt with accordingly.” The former top official praised the bloc’s recent stance on Greenland, where it decided to resist rather than accommodate threats coming from the U.S. “By standing together in the face of direct threat, Europeans discovered the solidarity that had previously seemed out of reach,” he said.  Draghi will take part in an informal gathering of European leaders next week aimed at discussing the direction for the bloc’s competitiveness, together with another former Italian prime minister, Enrico Letta. Both have laid out their economic visions in reports that form the building blocks of President Ursula von der Leyen’s second term atop the European Commission.

The center-right European People’s Party is eyeing “better implementation” of the Lisbon Treaty to better prepare the EU for what it sees as historic shifts in the global balance of power involving the U.S., China and Russia, EPP leader Manfred Weber said on Saturday. Speaking at a press conference on the second day of an EPP Leaders Retreat in Zagreb, Weber highlighted the possibility of broadening the use of qualified majority voting in EU decision-making and developing a practical plan for military response if a member state is attacked. Currently EU leaders can use qualified majority voting on most legislative proposals, from energy and climate issues to research and innovation. But common foreign and security policy, EU finances and membership issues, among other areas, need a unified majority. This means that on issues such as sanctions against Russia, one country can block agreement, as happened last summer when Slovakian Prime Minister Robert Fico vetoed a package of EU measures against Moscow — a veto that was eventually lifted. Such power in one country’s hands is something that the EPP would like to change.  As for military solidarity, Article 42.7 of the Lisbon Treaty obliges countries to provide “aid and assistance by all the means in their power” if an EU country is attacked. For Weber, the formulation under European law is stronger than NATO’s Article 5 collective defense commitment. However, he stressed that the EU still lacks a clear operational plan for how the clause would work in practice. Article 42.7 was previously used when France requested that other EU countries make additional contributions to the fight against terrorism, following the Paris terrorist attacks in November 2015.  Such ideas were presented as the party with a biggest grouping in the European Parliament — and therefore the power to shape EU political priorities — presented its strategic focus for 2026, with competitiveness as its main priority.  Keeping the pulse on what matters in 2026  The EPP wants to unleash the bloc’s competitiveness through further cutting red tape, “completing” the EU single market, diversifying supply chains, protecting economic independence and security and promoting innovation including in AI, chips and biotech, among other actions, according to its list 2026 priorities unveiled on Saturday. On defense, the EPP is pushing for a “360-degree” security approach to safeguard Europe against growing geopolitical threats, “addressing state and non-state threats from all directions,” according to the document. The EPP is calling for enhanced European defense capabilities, including a stronger defense market, joint procurement of military equipment, and new strategic initiatives to boost readiness. The party also stressed the need for better protection against cyberattacks and hybrid threats, and robust measures to counter disinformation campaigns targeting EU institutions and societies. On migration and border security, the EPP backs tougher asylum admissibility rules, faster returns, and strengthened external borders, including reinforced Frontex operations and improved digital systems like the Entry/Exit System.  The party also urged a Demographic Strategy for Europe amid the continent’s shrinking and aging population. The text, initiated by Croatian Democratic Union (HDZ), member of the EPP, wants to see demographic considerations integrated into EU economic governance, cohesion funds, and policymaking, while boosting family support, intergenerational solidarity, labor participation, skills development, mobility and managed immigration.  Demographic change is “the most important issue, which is not really intensively discussed in the public discourse,” Weber said. “That’s why we want to highlight this, we want to underline the importance.” 

ZAGREB — German Chancellor Friedrich Merz on Friday poured cold water on a suggestion by Manfred Weber, leader of the center-right European People’s Party, that a joint European army could play a role in postwar peacekeeping in Ukraine. Weber has made a number of striking proposals in recent weeks to project greater EU power on the international stage. In addition to soldiers operating under a “European flag” in Ukraine, he has called for one overall European leader — merging the jobs of European Council president and European Commission president. Speaking at an informal EPP summit in Zagreb, Croatia, Merz welcomed Weber’s attempts to revamp the EU but said these ideas did not represent immediate solutions to Europe’s problems.  “We must focus on the tasks at hand right now,” Merz replied, when asked about Weber’s initiatives. The chancellor added he had no problem with “us repeatedly asking institutional questions” on making Europe more powerful and united, and stressed that “these are questions that need to be discussed again and again.” However, Merz showed little appetite for getting bogged down in the sweeping European reforms that Weber’s proposals could require. “Achieving treaty changes in this European Union of 27 is a rather difficult task,’ the chancellor said. “I advocate that we first and foremost concentrate on the tasks that are now on the table.” He said those were improving defense capabilities and the continent’s flagging industrial competitiveness. While Merz was cool on Weber’s proposals about a European army, his government has still to decide on its commitment to German peacekeepers in Ukraine. While Berlin is not as forward as Britain and France in raising the possibility of providing peacekeepers, Merz has insisted: “We are not ruling anything out in principle.“ Germany also stresses it is already acting as a regional security guarantor on the Russian border, with nearly 5,000 troops posted to Lithuania, and through air policing missions across Eastern Europe. When asked about Merz’s skepticism about his proposals, Weber said: “We are in dialogue. We are in discussion.”

German industrial giant Bosch on Friday confirmed plans to cut 20,000 jobs after profits nearly halved last year, underlining the mounting strain on Germany’s once-dominant manufacturing sector and increasing the pressure on politicians in Berlin to find a solution. Official data released Friday also showed Germany’s unemployment rate, unadjusted for seasonal factors, rising to 6.6 percent — the highest level in twelve years. The number of unemployed people surpassed three million in January. “Economic reality is also reflected in our results,” Bosch CEO Stefan Hartung said, describing 2025 as “a difficult and, in some cases, painful year” for the company, which is a leading supplier of parts for cars. The move lands amid a deepening slump in the country’s automotive industry, long the backbone of German manufacturing. The sector has been shedding jobs rapidly: A 2025 study by EY found that more than 50,000 automotive positions were cut in Germany last year alone. Germany’s automotive downturn has become a wider political test for the government in Berlin and Europe more widely. Once the economy’s crown jewel, the industry is now being challenged by current policy on electric vehicles, energy costs and aggressive competition from Chinese manufacturers. As suppliers weaken, the risk is shifting from lower profits to a lasting loss of competitiveness. With layoffs rising and investment decisions being delayed, Chancellor Friedrich Merz’s government is coming under growing pressure from workers, unions and industry leaders to rethink Germany’s industrial strategy — as doubts spread domestically and across Europe about the country’s ability to remain an economic powerhouse.

BERLIN — German Chancellor Friedrich Merz warned that Europe will not withstand a new era of rising great-power imperialism unless it embraces the logic of hard power. “We will only be able to implement our ideas in the world, at least in part, if we ourselves learn to speak the language of power politics, if we ourselves become a European power,” Merz said Thursday during a speech in Germany’s federal parliament. Merz’s comments build on a speech the chancellor gave last week at the World Economic Forum in Davos in which he warned of a “radically changing” U.S. and “a new world of great powers being built on power, on strength, and when it comes to it, on force.” Merz said Thursday that Europe must embrace the logic of hard military and economic power in order to preserve Europe as a force for democracy in the world. “We are, in fact, a normative alternative to imperialism and autocracy in the world,” Merz said. “We have something to offer our partners around the world, both economically and, above all, in terms of our ideals.” Merz also joined other European leaders in condemning U.S. President Donald Trump’s comment last week that NATO allies had stayed “a little off the front lines” during the war in Afghanistan, a statement that sparked outrage in Europe’s capitals. During the nearly 20-year mission in Afghanistan, launched in response to the September 11 attacks on the U.S., 59 German soldiers lost their lives. “We will not allow this mission, which we also carried out in the interests of our ally, the United States of America, to be disparaged and belittled today,” Merz said to sustained applause. “I would like to say once again to our soldiers on duty and at their bases today that your service was and is valuable.” Given Germany’s ongoing dependence on U.S. military power for its own defense, Merz has been reluctant to openly criticize Trump even as he warns that Europe must prepare to go it alone as the U.S.-led global order crumbles. On Thursday, he urged the German public and European allies to seek to preserve the alliance with the U.S. to the degree possible. “We should not recklessly jeopardize established alliances,” Merz said. “The transatlantic alliance and transatlantic trust are still valuable in their own right today. For us in Germany, this is particularly true.” At the same time, Merz is pushing to make Germany more militarily independent of the U.S. Shortly after becoming chancellor last May, Merz vowed to take more responsibility for Europe’s defense by building the strongest conventional army in Europe.

BRUSSELS — The European Commission’s vice president Henna Virkkunen sounded the alarm about Europe’s dependence on foreign technology on Tuesday, saying “it’s very clear that Europe is having our independence moment.” “During the last year, everybody has really realized how important it is that we are not dependent on one country or one company when it comes to some very critical technologies,” she said at an event organized by POLITICO. “In these times … dependencies, they can be weaponized against us,” Virkkunen said. The intervention at the event — titled Europe’s race for digital leadership — comes at a particularly sensitive time in transatlantic relations, after U.S. President Donald Trump’s recent threats to take over Greenland forced European politicians to consider retaliation. Virkkunen declined to single out the United States as one of the partners that the EU must de-risk from. She pointed to the Covid-19 pandemic and Russia’s invasion of Ukraine as incidents that point to Europe’s “vulnerabilities.” She said the U.S. is a key partner, but also noted that “it’s very important for our competitiveness and for our security, that we have also our own capacity, that we are not dependent.” The Commission’s executive vice president for tech sovereignty swung behind the idea of using public contracts as a way to support the development of European technology companies and products. “We should use public procurement, of course, much more actively also to boost our own growing technologies in the European Union,” she said when asked about her stance on plans to “Buy European.” Those plans, being pushed by the French EU commissioner Stéphane Séjourné, in charge of European industy, to ensure that billions in procurement contracts flow to EU businesses, are due to be outlined in an upcoming Industrial Accelerator Act that has been delayed multiple times. “Public services, governments, municipalities, regions, also the European Commission, we are very big customers for ICT services,” Virkkunen said. “And we can also boost very much European innovations [and startups] when we are buying services.” Virkkunen is overseeing a package of legislation aimed at promoting tech sovereignty that is expected to come out this spring, including action on cloud and artificial intelligence, and microchips — industries in which Europe is behind global competitors. When asked where she saw the biggest need for Europe to break away from foreign reliance, the commissioner said that while it was difficult to pick only one area, “chips are very much a pre-condition for any other technologies.” “We are not able to design and manufacture very advanced chips. It’s very problematic for our technology customer. So I see that semiconductor chips, they are very much key for any other technologies,” she said.

Europe isn’t doomed to inexorable decline — and in fact is doing better than most people realize, said the IMF’s Kristalina Georgieva. Much of the European Union’s policymaking bubble has been gripped with despair since the bloc’s weakness was exposed during a recent confrontation with the U.S. over Greenland. While U.S. President Donald Trump eventually backed down, the European military response — sending a symbolic handful of soldiers to the North Atlantic island — underlined that had the White House really wanted to seize Greenland, Europeans would have had no choice but to accede. But in an interview with POLITICO, Georgieva, managing director of the International Monetary Fund, said the pessimism was misplaced. In an end-of-year shortlist of top-performing economies put together by the Economist, she noted, the top 10 included seven EU countries, with Portugal in the top spot. The Iberian economy has recorded steady growth while comfortably paying down its debt in the past few years. That’s a fact, she said, that should be celebrated. “Europeans — we are modest people. We don’t brag,” the IMF head stated. She recalled how a U.S. colleague had recently done “something marginal.” “He said ‘oh, let’s look at this. I’m great. I’m fantastic,’” Georgieva recounted. “In Europe you do something great and you say ‘not too bad.’ In this world we are in now, you have to brag a little, exude confidence.” Even before the Greenland standoff, a sense of despair had settled over the top echelons of European economic decision-making. Mario Draghi, former head of the European Central Bank, warned that the bloc faced “slow agony” if it didn’t reform. Georgieva acknowledged the increasingly sharp-elbowed way in which countries now operate — one that leaves little room for multilateral organizations like her own IMF. In a speech earlier on Monday she acknowledged that the world had become “multipolar” — code for a new era of jostling geopolitical blocs that has replaced unilateral American dominance. Speaking to POLITICO, Georgieva said that “geopolitical factors play an increasingly bigger role in defining the world economy.” On Greenland, she said the fact that “allies find it more difficult to retain their sense of common purpose” was a “significant change.” But she insisted that the “destiny of Europe is in the hands of Europeans.” The IMF’s list of advice to reform the EU’s economy echoes Draghi’s own, contained in his competitiveness report from 2024: They include strengthening the single market, cutting regulations on businesses, and integrating the continent’s fragmented energy and financial systems. Mario Draghi, former head of the European Central Bank, warned that the bloc faced “slow agony” if it didn’t reform. | Olivier Matthys/EPA Georgieva said it was “paramount” for the EU to press ahead with reform. “Get your own house in order,” she said. Three of the Economist shortlist’s best-performing countries — Ireland, Portugal and Greece — were put under IMF supervision at the height of the eurozone crisis. There, they had to agree to painful adjustments known as structural reform programs, which included tax hikes and brutal cuts to public services. In the case of Greece in particular, those structural reforms resulted in a sharp increase in unemployment and poverty levels; gross domestic product per capita is still not at its pre-crisis level. But, said Georgieva, their current success is proof that countries, and the EU as a whole, can change their economic trajectories. Asked whether Europe should consider retaliating against U.S. aggression by selling off assets like government bonds, a suggestion included in a recent analyst report from Deutsche Bank, the senior official urged caution. “I would say that the smooth functioning of the international monetary system is of value to all countries,” she said. “Disturbing that smooth functioning of the international monetary system with the same token can bring negative impact.” The Bulgarian boss of the Washington, D.C.-based fund did, however, back a deeper pool of joint EU debt — an idea favored by Draghi but regarded with suspicion by frugal countries like Germany and the Netherlands. As for the disbursement of $8.1 billion in IMF funds to Ukraine to help the country meet its financing needs, Georgieva said she was aiming to hold an IMF board meeting in the second half of `February at which the board could approve the program and start paying out funds. Though the amount is relatively small — less than a tenth of the €90 billion that the EU has agreed to lend to Ukraine — IMF approval is a signal of confidence for financial markets. The IMF chief also said that a meeting “is scheduled” with U.S. Treasury Secretary Scott Bessent regarding the situation in Venezuela, and that it would happen in the “nearest future.” The IMF stopped working with Venezuela in 2019. The fund estimates that the South American country’s economy, battered by U.S. sanctions and plagued by mismanagement, has shrunk to a third of its previous largest size. Since the U.S. captured Venezuelan President Nicolás Maduro at the start of the year, it has floated the possibility of allowing Venezuela to access IMF financing again.