Jean-Claude Juncker, the former European Commission president and former Luxembourg prime minister, once said: “We all know what to do, but we don’t know how to get re-elected once we’ve done it.”
This observation encapsulates Europe’s current dilemma. Most European leaders know what reforms and budget cuts are needed to boost productivity, promote innovation, streamline regulation, rein in public spending, and shore up their defenses. But after decades of welfare expansion, voters are reluctant to give up their social benefits.
The European electorate has become risk-averse, protective of living standards that no longer reflect underlying economic fundamentals. Yielding to short-term incentives, parties on both the left and the right now vie to outdo one another in making unsustainable promises, feeding a populist cycle that deepens polarisation.
In his seminal 2024 report on European competitiveness, Mario Draghi, the former president of the European Central Bank and
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