Emmanuel Macron’s Dire Warning: The EU "Could Die" Without Urgent Economic Reforms

In a stark and alarming address at the Global Dialogue event, French President Emmanuel Macron issued a grave warning about the future of the European Union (EU), stating that it "could die" if significant changes are not made to address over-regulation and under-investment. This statement comes at a time when the EU is grappling with its economic competitiveness against global powerhouses like China and the United States.

The Economic Landscape: A Call for Urgency

Macron’s comments reflect a growing concern among European leaders regarding the EU’s ability to maintain its economic standing in an increasingly competitive global market. "The EU could die, we are on the verge of a very important moment," Macron emphasized, highlighting the urgent need for a shift in the EU’s economic strategy. He pointed out that the traditional model of governance and regulation is no longer viable, warning that if the EU continues on its current path, it risks falling out of the market entirely within the next two to three years.

This sentiment is echoed in a recent report by former Italian Prime Minister and European Central Bank chief Mario Draghi, who underscored the EU’s struggle to compete independently against the likes of China and the United States. Draghi’s analysis calls for a more integrated single market to foster pan-European businesses capable of competing on a global scale.

The Need for Investment: A Comprehensive Strategy

To counteract the EU’s economic stagnation, Draghi proposed a comprehensive "industrial strategy for Europe," which would require an investment of €800 billion (£672.2 billion). This ambitious plan aims to bolster the EU’s industrial base and enhance its competitiveness in the global market. Macron has echoed this call for increased investment, urging EU member states to pursue a banking union package that would ensure stability and reliability within the Eurozone’s banking sector.

Defence and Security: A Shift Towards Greater Integration

Beyond economic concerns, Macron also highlighted the necessity for greater integration in defence matters. He cautioned against the EU’s over-reliance on the United States for security, particularly in light of shifting geopolitical dynamics. The need for a unified European defence strategy has become increasingly pressing, especially as tensions rise globally and the EU faces external threats.

The Trade Landscape: Tariffs and Tensions

Macron’s warning comes at a critical juncture for the EU, particularly as it prepares to vote on imposing tariffs of up to 45% on imports of electric vehicles (EVs) made in China. This move, supported by France, Greece, Italy, and Poland, represents one of the EU’s most significant trade measures to date and could provoke retaliation from Beijing. The European Commission is currently conducting an anti-subsidy investigation into Chinese EVs, which have seen a dramatic increase in market share within the EU.

The registration of China-built EVs surged from 3.5% of the EU market in 2020 to 27.2% in the second quarter of 2024, raising alarms among European manufacturers. The EU auto industry has generally opposed such tariffs, particularly German carmakers who rely heavily on the Chinese market for sales.

The Broader Implications: A Call for Unity

Macron’s warning about the potential demise of the EU resonates with broader concerns about the bloc’s future. As the EU grapples with economic challenges and geopolitical shifts, the need for unity and a cohesive strategy has never been more critical. The call for increased spending on joint defence projects, as suggested by Draghi, is particularly relevant in light of recent comments from Republican presidential candidate Donald Trump, who indicated a willingness to allow Russia to act freely against NATO members that do not meet defence spending targets.

Conclusion: A Pivotal Moment for the EU

As the EU stands at a crossroads, Macron’s warning serves as a wake-up call for member states to reassess their strategies and priorities. The need for investment, greater integration in defence, and a unified approach to trade are all essential components of a robust response to the challenges ahead. Without decisive action, the EU risks losing its place in the global economic landscape, a fate that Macron believes could lead to its very demise. The coming months will be crucial as the EU navigates these complex issues, and the decisions made will shape the future of the bloc for years to come.