One year after Mario Draghi laid bare Europe’s economic frailty, 30% GDP per capita behind the United States, an €800 billion annual investment shortfall, electricity prices two-and-a-half times America’s, implementation stands at a dismal 11% of his 383 proposals. The familiar Brussels cycle has resumed: reports are commissioned, headlines flare, then inertia reasserts itself. To many, the continent’s slide feels inexorable, another chapter in the long story of relative decline against the dynamism of the US and the scale of China. We argue that reforms must not be hard, and can be realised within one electoral cycle.
The familiar reading misses the point: Europe is not doomed by demography or geography, but it is rather held back by policy choices that can still be reversed within a single electoral cycle. The fixes are neither revolutionary nor untested. They exist in plain sight across the Nordic and Baltic states (and lately even Spain), which have quietly outpaced the EU average on productivity, fiscal sustainability and adaptability. The question is whether Brussels and the national capitals have the will to borrow what works.
First, slash the administrative thicket that strangles small firms. In most member states a small business spends ten times more per employee on compliance than a large corporation. Registration can take weeks, tax filings months. The solution is brutally simple: a 30-minute online company registration valid EU-wide, pre-filled tax returns capped at ten minutes for straightforward cases, both individual and for small businesses. On top, we require a hard sunset clause on every subsidy to stop shielding industries from much needed competition and the so-called “creative destruction“. Denmark and Estonia have shown that light-touch administration does not mean deregulation; it means removing the friction that keeps entrepreneurs from scaling. Do this, and the productivity gap with the US begins to close.
Second, defuse the pension time-bomb before it detonates. The worker-to-pensioner ratio is falling from 2.7:1 to 1.5:1 by 2050. Pay-as-you-go systems or so called “generation treaties“, once a post-war miracle, are now mathematically unsustainable. Sweden offers the template: cancel the implicit “generation contract”, guarantee only a modest basic pension floor (€900 for singles, €1,200 for couples), and shift the rest to mandatory private savings with a fixed contribution rate and automatic stabilisers. Transparent annual statements (the Swedish “orange envelope” or the Dutch online platform) have made the reform politically durable. The alternative is ever-higher contribution rates or ever-later retirement ages, both politically toxic and economically corrosive betraying the future of our economies.
Third, rationalise healthcare before it bankrupts the budget. For example, Germany’s two-class system wastes €9 billion a year; low-volume hospitals deliver worse outcomes (mortality after surgeries is 4.5 times higher in rural general hospitals in Germany). Denmark cut acute hospitals from 40 to 21 and gained two percentage points of annual productivity in the sector plus almost three extra years of male life expectancy. The recipe: universal public insurance independent of job or income, GPs as gatekeepers, and specialist centres for complex care. Patients may travel farther for some procedures, but survival rates improve and costs fall. In an ageing continent this is not optional; it is arithmetic.
Fourth, make immigration work for Europe, not against it. The continent needs roughly one million skilled immigrants a year ranging from plumbers to surgeons. Yet uncontrolled inflows erode social cohesion. The fix is skills-based selection only, EU immigration centres abroad with transparent criteria, a 30-day fast-track Blue Card, and zero tolerance for illegal entries, particularly young single men without work permits. Migration is being weaponised by adversaries. Europe must treat it as a security issue as well as an economic one. Imported antisemitism, political Islam, right-wing extremism and left-wing anarchism have no automatic right of residence. The values Europe was built on—Christian roots, secular governance, tolerance—must be defended, not apologised for.
Fifth, pursue strategic autonomy without the illusion of autarky. Europe invents (MP3, mRNA vaccines) but lets others capture the value. Electricity costs two-and-a-half times more than in the US; defence procurement is fragmented across all member states (12 different tank types, local procurement rules) and 2/3 of all defence goods is imported. (Technology) companies decamp to America. Energy becomes a gridlock, while renewables offer zero marginal cost and can power AI and industry. They have to be utilised even particular interest are against scaling both, power generation and the grid. Adopt an “EU-first” doctrine for strategic sectors: standardise defence equipment, subsidise only European champions in EVs, batteries and chips. Keep data in Europe, and require technology from abroad to be open and auditable. On top, we must protect critical supply chains (rare earths, chemicals, agriculture) against state-subsidised predators without retreating into blanket protectionism.
None of this requires mass redundancies, but we need to shift labour from the public sector because an ageing society needs every skilled pair of hands in productive work, not paperwork. Our policies do not mean closing borders, but managing skilled migration is essential. It does not mean crude protectionism, it means insisting on a level playing field against subsidised rivals.
The choice is stark. Continue drifting and Europe’s share of global GDP will shrink toward irrelevance, leaving it a culturally rich but powerless museum. Or implement these five reforms—already proven, already popular where tried—and reclaim the agency that Draghi warned was slipping away. The models exist. The data is clear. Only political courage has been missing.
Europe has talked enough. Now it must act.
The Friday Thinkers