EU heads into a perfect political storm as budget stalls and all four biggest economies face elections
The European Union is facing a perfect political storm. Last week's summit gave Brussels a taste of how hard it is going to be to get a deal on the budget — or anything else. After two days of talks, leaders failed to make headway on the €2 trillion budget and instead became embroiled in an unexpectedly bitter row on energy policy. The summit's conclusions notably omitted any mention of finding consensus on the budget before the end of the year.
At the root of the crisis, the EU's four biggest economies are all heading into elections or political upheaval at once. Spain goes to the polls next month, with the center right and far right on track to take power, polls suggest. France changes presidents in April, with far-right figurehead Marine Le Pen favoured in the polls. The Alternative for Germany is ascendant, putting Friedrich Merz's chancellorship in doubt. And Giorgia Meloni's unusually long-serving Italian government is heading to an election in 2027.
Cypriot President Nikos Christodoulides told POLITICO on the sidelines of last week's European Council: 'Everybody used to understand that we need to finish a political agreement by the end of the year.' But the Spanish election means that will no longer be possible, he said. Next year, he added, 'it's going to be France, Italy' and others going to the polls, predicting even more complications for the bloc.
The pessimism at the summit was palpable. POLITICO spoke to six diplomats and officials, who warned of sharp headwinds in the coming months. 'Next year, it will be worse,' said one senior EU diplomat. Carla Tavares, a senior MEP with the Socialists and Democrats and co-lead on budget negotiations, said that because of the election calendar, 'in the next year it'll be much more difficult in the member states and inside the European Parliament.'
The bloc's internal malaise could hardly come at a worse time. U.S. President Donald Trump is undermining the transatlantic alliance, the trade imbalance with China is widening, and Russia is waging a shadow war across Europe — from cyberattacks and sabotage to an attempted drone attack at Leipzig airport that Berlin blamed on the Kremlin. Beijing is tightening its grip on critical supply chains and flooding European markets with cheap exports.
Belgian Prime Minister Bart De Wever told reporters during the summit: 'They seek our division. They want our division.' Without naming names, he was referring to countries to the east and west of Brussels. 'And they have, of course, points where they can hurt us.' Former Lithuanian Foreign Minister Gabrielius Landsbergis was less circumspect: 'Now we are under assault from three sides: from the U.S., Russia and China.'
Then there is the Ukraine problem. According to the IMF, Ukraine faces a budget shortfall of $30 billion to $35 billion next year, with Russia battering its energy infrastructure ahead of a brutal winter. That is despite the €90 billion the EU already agreed to stump up last year. Landsbergis said the coming months are looking 'extremely dire' for Kyiv. 'Everything falls on European shoulders,' he said.
Ukrainian President Volodymyr Zelenskyy sounded a grim note at last week's summit, telling reporters that if Ukraine falls, 20 million Ukrainians will flood into the EU. 'Russia is killing us,' he said. 'They don't want to stop.' One solution to Ukraine's funding woes could be the €200 billion in Russian assets immobilized indefinitely in Brussels-based financial depository Euroclear. But there is no sign of the EU finding common ground there either, with Belgium, which vetoed previous efforts, still refusing to budge.
Other potential solutions, such as issuing more joint debt, will require messy compromises — just as Brussels finds itself with even less room to maneuver. The EU's problems go beyond its budget or individual policy files. With the political futures of several of Europe's most powerful leaders in question, Brussels risks losing the stable alliances and long-serving national heavyweights needed to broker compromises. 'We now have Europe with no obvious leader,' another EU diplomat argued.
French President Emmanuel Macron cannot constitutionally serve a third consecutive term; after leaving the Élysée Palace in April he will have to find new digs in Paris. During a closed-door discussion at last week's summit, Macron admitted he would not have a political mandate to sign a deal on the budget in his final months in power.
Spanish Prime Minister Pedro Sanchez is on track for defeat after eight years in power, according to polls. Spaniards will vote on Nov. 29, meaning Sanchez will be in full election mode during EU leaders' meetings on Nov. 13 and Nov. 26. Madrid is not expected to form a government until January, which could derail the budget talks, according to two EU diplomats.
There could be a sweet spot in January to get the budget over the line, a senior EU official suggested — the last chance to strike a deal before Europe's political upheaval makes compromise even harder. 'So far, the EU's leaders have simply been too slow,' said Siegfried Mureșan, the European People's Party's co-lead on the budget. 'Time is running out.'
