EU at crossroads as Draghi reforms stall ahead of critical elections

The European Union faces a critical juncture as time runs out to implement the economic reforms proposed by former European Central Bank chief Mario Draghi two years ago. The bloc has set the end of 2027 as its deadline, but progress has been slow. As of July, only 15.7% of Draghi’s proposals have been fully delivered, with about 40% partially addressed. The most radical measures, such as creating single capital and energy markets, have seen just 3% implemented, according to the Institut Montaigne.

Upcoming elections across key member states could further complicate reform efforts. France’s elections in April 2027 have the EU scrambling to finalize its next long-term budget, fearing a potential far-right government under Marine Le Pen. Le Pen’s National Rally seeks to reduce France’s budget contributions and opt out of key energy policies. Elections in Spain, Italy, and Poland later in 2027 could also stall reforms as leaders hesitate to support measures that require relinquishing national sovereignty.

Germany, the bloc’s largest economy, has been a reform leader under Chancellor Friedrich Merz. However, surging support for the far-right Alternative for Germany (AfD) could slow down these efforts. The AfD’s rise has pushed the ruling party to avoid reforms that appear to reduce national sovereignty. Despite popular spending measures, reform initiatives like raising the state pension age remain unpopular, as evidenced by recent election results.

EU officials are aware of the urgency. European Commission President Ursula von der Leyen emphasized the need to accelerate projects in Europe’s strategic interests. However, there is little appetite for pooling power. Draghi’s call for more euro zone common borrowing seems unlikely to succeed. Key tests include delivering a savings and investment union and an energy union. The International Monetary Fund estimates the reform agenda could raise European productivity by 20% over a decade, but this projection relies on optimistic assumptions.