What Role Will Europe Play in the World of Tomorrow?

Written by Julien Chevalier (Master in Political Economy of Europe in the World)

As major powers assert themselves, Europe's lack of cohesion and strategic vision risks sidelining it from the global stage. In this new world, Europe’s vulnerabilities are becoming apparent, particularly its reliance on Russia’s energy, on China’s foreign trade, on United States’ military, but also its fragility in terms of successful federalism. Therefore, it faces an existential question: can it remain a global power in the world of tomorrow?

The End of Globalization: A Fractured Economic Landscape

Born after World War II and consolidated after the Cold War, European integration flourished in a world of boundless opportunities. Globalization fostered the belief that economic barriers would disappear permanently, markets would function with full efficiency, and international stability would prevail. But that era is coming to an end. The pandemic, the resurgence of global conflicts (Ukraine, Gaza, Syria...), the rise of protectionism, and the increasing cost of capital have shattered the illusion of a fully open world.

Today, its push to “de-risk” - to reduce its reliance on foreign powers - reflects a necessary adaptation to changing circumstances. However, unlike the United States, which leverages its singular economic dominance, or China, which relies on centralized policymaking and long-term strategic vision, Europe remains constrained by its structural weaknesses. The continent has long lacked a real political structure, forcing it into short-term decision-making. No major policy moves are made at the federal level. And this situation is likely to worsen: the rise of nationalist parties in the latest European elections will only accelerate Europe's political paralysis.

Moreover, the erosion of global institutions that once provided a buffer against economic and political instability leaves Europe particularly exposed. The World Trade Organization (WTO) is weakening, trade blocs are becoming more insular, and economic nationalism is rising. The recent European elections emphasized this aspect, with the rise of populist parties all over the Continent (France, Italy…). Europe’s traditional approach is now insufficient in a world where power politics once again dictate economic outcomes.

Trump’s Shadow Over Europe: A Transatlantic Shift?

As if navigating an unstable economic environment wasn’t enough, Europe must also prepare for the return of Donald Trump to the White House. His first presidency was marked by an America-first approach that sidelined European interests, and a second term will not be different, even worse. The next five years will be very challenging according to recent statements by the former U.S. president. Trump's open contempt for NATO and the European project raises the specter of U.S. disengagement from the continent's security. He also proposed conditions that are almost impossible for European countries, namely raising defense spending to 5% of GDP— which would likely benefit U.S. defense companies given Europe's forced deindustrialization over the past 20 years.

Nonetheless, a full U.S. withdrawal from NATO will also highlight Europe’s weakness. In such a scenario, Europe would find itself highly exposed geopolitically, lacking a real defense policy and depending on fragmented national militaries. Meanwhile, a stronger U.S. dollar and renewed trade tensions could further undermine European economies, especially Germany’s export-driven model. From another perspective, Trump's policies could benefit Southern European countries as a weaker euro against the dollar enhances their competitiveness. This global change brought about by Trump's return could, in the end, restore a lost equilibrium.

Europe at a Crossroads

Beyond external threats, Europe is hindered by its internal dysfunctions. Growth has been stagnating for more than a decade, productivity gains are minimal, deindustrialization is growing fast, and innovation lags behind China’s and the US’. Even if Europe possesses incredible characteristics (strong education system, exceptional cultural resources, a very large consumer market with 500 million consumers...), it lacks the dynamism needed to compete in the 21st century. The EU’s governance structure, marked by political inertia and a rigid fiscal framework often prevents bold reforms. Debt-laden economies in Southern Europe (and now in Northern Europe) struggle to finance long-term investments while demographic decline and rising social unrest threaten stability.

If Europe wants to maintain its status as a global power, it must embrace the future rather than merely regulate it. For instance, green transition and artificial intelligence represent two areas where Europe has made regulatory progress (the European Green Deal, AI act...) but regulations alone will not suffice. The EU is a leader in setting standards, but it falls short in investments. While the U.S. and China – again - invest billions in AI and the ecological transition, Europe remains behind and very dependent: the EU promotes carbon neutrality yet it remains reliant on Chinese-manufactured solar panels and American-led clean-tech innovations... And, despite a succession of reports (the most recent being Mario Draghi's call for 800 billion euros in annual investments), Europe's financial capacity remains extremely limited with a small European budget and very complicated financial situations (many European countries are now under sanction from Brussels because their deficit exceeds 3%).

If Europe wants to shape the world of tomorrow, or at least remain the power it once was for centuries, it must take a new path and find its own independence. That means an aggressive industrial policy, a real European defense strategy, and a financial system capable of mobilizing large-scale investment, which can only be achieved through a transformation of European institutions - in particular the European Central Bank (with a new monetary policy) and the European Commission (granting the Parliament greater legislative power). From a broader perspective, Europe has only two possible paths: a Europe of nations, in which each country guarantees its sovereignty and in which European countries work together, or a federal power. But the second option will always remain utopian given the structural differences between European countries.

Europe must decide whether it wants to be an independent power capable of shaping the world (as it has for many centuries), or whether it will continue to vanish, hoping that history will be kind. In any case, it cannot live in an illusion. The future is unfolding rapidly, and the decisions made now will shape the decades to come. The world of tomorrow is coming, with or without Europe.

About Our Writer - Julien Chevalier

Economic analyst in the European Institute at the London School of Economics (LSE). Specializing in monetary policies, he has written for various media including Les Echos and Le Monde. He has also appeared on TV channels, including TV5 Monde, and conducted interviews with leading figures such as Jacques de Larosière, Yanis Varoufakis and Jean-Claude Trichet. A former parliamentary advisor to the French Senate (Finance Committee), he was also editor-in-chief of a program broadcast on LCP- Assemblée nationale.