EU risks long-term decline if economic reforms stall ahead of elections
The European Union faces a critical deadline to implement the economic reforms proposed by former European Central Bank chief Mario Draghi two years ago. With the end of 2027 as the target date, the EU has only completed 15.7% of Draghi’s proposals in full, with another 40% partially addressed. The most radical measures, such as creating single capital and energy markets, have seen just 3% of the necessary legislation passed, highlighting the slow progress.
Upcoming elections across key member states could further complicate reform efforts. France’s elections in April 2027 may result in a far-right government under Marine Le Pen, which seeks to reduce France’s budget contributions and opt out of key energy policies. Spain’s early election in November 2026 and upcoming votes in Italy and Poland in 2027 could also derail reform momentum, as leaders may avoid measures that require surrendering national sovereignty ahead of elections.
Germany, under Chancellor Friedrich Merz, has been more ambitious in its reforms, including loosening the “debt brake” to allow higher defence spending and creating a €500 billion infrastructure fund. However, recent election results show public resistance to reforms, such as raising the state pension age and cracking down on welfare abuse, as the far-right Alternative for Germany (AfD) gains support. This political shift could slow down the EU’s reform agenda.
EU officials are increasingly aware of the urgency to accelerate strategic projects. European Commission President Ursula von der Leyen emphasized the need for rapid progress in her annual address. Key tests include delivering a savings and investment union and an energy union, which could help tap into the €35 trillion in EU household savings and simplify the fragmented regulatory system. The International Monetary Fund estimates that these reforms could boost European productivity by 20% over a decade, though this projection depends on several optimistic assumptions.