EU elite retreated to a Belgian castle on February 12 to formalize what others had long priced in: Europe is losing. It was billed as a competitiveness summit. Its outcome—pledging to address an economic crisis in 2027 that has been brewing for decades—reads like a declaration of surrender.
Europe’s decline did not begin at that meeting. It stems from long-standing operational choices: energy priced at uncompetitive levels, a regulatory system that rewards output over restraint, protection of declining sectors, and a sovereignty architecture that fragments decision-making while competitors consolidate it.
The immediate question is whether the EU is chasing events while ignoring entrenched problems. Ukraine has often served as a unifying rallying point, but the leaders are consumed by the war and have little political energy left to confront Europe’s economic morass. Brexit, the pandemic, China’s industrial rise, Trump’s return, Gaza, Venezuela, Iran and migration pressures have repeatedly overtaken the agenda. Decline is acknowledged but never urgent enough to address.
The pattern is structural: delay acknowledgement, commission analysis, promise action at the next summit and repeat while factories vanish. Beijing builds battery plants in the time Brussels drafts a framework to discuss battery policy. Chinese automakers produce EVs at far lower cost; Europe tariffed them in 2024 only to remove tariffs in 2026 and to backtrack on a 2035 combustion-engine ban, creating confusion for producers and consumers. The chemical industry relocates to America, where energy trades at prices Europe forfeited when it cut Russian gas for reasons of principle rather than industrial logic.
Energy exposes the surrender most clearly. Industrial gas in the EU costs roughly five times what American manufacturers pay; electricity is more than twice as expensive compared with the US, China and India. Ursula von der Leyen conceded no conclusion was reached and promised “different options” by the next European Council. Leaders offered timelines and slogans but no decisive action.
Two debates dominate: forcing the purchase of European products (“Buy European”) to shield firms that cannot compete, and deregulation, as even the Commission’s headquarters admits the “Brussels Effect” no longer disciplines anyone but itself. Experts who built careers on the idea that Europe could regulate the world still invoke it, while production moves to jurisdictions that approve factories in months, price energy competitively and treat regulation as a tool for expansion. Compliance has become a structural cost, not a competitive advantage.
The share of EU firms citing regulation as a major obstacle rose sharply in four years. Between 2019 and 2024 the EU adopted some 13,000 legislative acts—far more than the US Congress in the same period—yet Europe legislates at scale and does not build at scale: a single factory can wait years for approval. The reason is operational: actors in the system have incentives to legislate and none to restrain. The Commission expands its remit; parliamentary rapporteurs build careers by closing files; rotating Council presidencies need six-month deliverables. No one is paid to switch the regulatory machine off.
Meanwhile, European industry is dying in concrete ways. Pharmaceuticals, semiconductors and renewable-energy equipment—sectors Europe once dominated—are now assembly lines for components made in Asia, selling brands whose value is legacy, not capability. The Eurozone ran a current-account surplus topping €500 billion in 2024—appearing strong, but in truth largely rent collection on IP accumulated when Europe still manufactured. Production is ceded to competitors who will soon own that IP too.
Over two years, most key competitiveness indicators stagnated or worsened. The EU response has been to accelerate work on the single market and rely on “enhanced cooperation” if unanimity fails—allowing subsets of member states to act while the rest lag. That two-speed Europe means a minority inches forward while the rest sink faster.
The summit also sidestepped a contradiction: promoting Ukrainian reconstruction as a pathway to membership while postponing the institutional, fiscal and governance implications of enlargement. Accession before the 2030s is implausible: enlargement requires unanimous approval at every stage and faces abundant roadblocks.
Fixing this would require redesigning a social model built when Europe dominated manufacturing and could fund generous welfare, early retirement and long vacations from export-led surpluses that ended decades ago. The model survives on deficit spending, a decade of negative interest rates and the hope that productivity will return if Europe simply regulates itself into competitiveness. It will not. The green agenda—emissions trading, carbon border adjustments and sustainable mandates—imposes costs industry cannot always pass to consumers who buy cheaper alternatives from countries that do not share Europe’s climate priorities.
Every major reform—capital markets union, defense integration, industrial champions—dies in committee because it would require states to surrender sovereignty and voters to accept pain leaders will not impose. The summit handed the diagnosis to Mario Draghi and Enrico Letta—figures who once governed with authority but did not fix structural dysfunctions—an ominous signal. Reports will pile up: Draghi on competitiveness, Letta on the single market, others on energy, defense and demographics. Europe needs leaders willing to tell voters that the life they have known is over, that the welfare state cannot be funded at current tax rates, that protecting dying industries only delays the inevitable, and that the choice is lower living standards now or far harsher adjustment later.
Political survival routinely trumps public interest. Pre-summit gatherings saw 19 states coordinate while others protested principle outside the room; national leaders prioritize domestic optics over collective outcomes, calibrating interventions against electoral risk. That is the measure of the EU elite: political survival first, public interest second, industrial subsistence after. A leader who prioritizes national positioning will not ask voters to bear the costs; they schedule the next summit instead.
By setting substantive talks for 2027, leaders effectively counted down the continent’s industrial decline. By then, Chinese automakers may be entrenched in EU markets and American tariffs may have pulled more European capital west. Defense spending deferred for years will crowd out industrial investment. The crisis will deepen and the room to act will narrow—timetables conveniently falling beyond many leaders’ mandates.
Europe still has universities, research capacity and industrial infrastructure. What it lacks are politicians prepared to deploy those resources decisively. The EU was not built to compete with continental-scale economies run by governments that treat industrial policy as existential. China redirects capital, rewrites regulations and reorganizes whole sectors in months. The US, despite dysfunction, can still pass trillion-dollar bills and restructure when waiting becomes costlier than acting.
Competitors will not wait. Europe chose the social model over competitiveness, consensus over speed, process over power. At the Belgian castle, the crisis was acknowledged and postponed. The narrower question now is whether Europe will confront what it chose to bury while there is still time to exhume it.
