In the next year, the continent faces political crisis, economic stagnation, Trump’s trade war and the end of the war in Ukraine.
In the next year, the continent faces political crisis, economic stagnation, Trump’s trade war and the end of the war in Ukraine.
By Ali Rıza Taşdelen
For the European Union (EU), 2024 has been a year of deepening economic and political downfall. It is appropriate to gauge the pulse of the EU through the political and economic developments in its largest and most influential countries, France and Germany.
The challenges faced in 2024 are expected to carry over into 2025, and likely to worsen. Europe, already grappling with competition from China, will also face “trade wars” with the new US President Donald Trump. Trump’s campaign pledge to impose a 10% tariff on European goods will directly bring an economic cost on EU exporters.
In 2008, Europe was shaken by a financial crisis. Without having recovered, the war in Ukraine in early 2022 and the energy crisis caused by sanctions on Russia led to inflation, rising interest rates, falling investments, shrinking consumption and weakened competitiveness threw the region into stagnation. Europe’s involvement in the war alongside the US marked a turning point in this collapse. Germany, dragged into a crisis difficult to treat, sent 37 billion euros to Ukraine during the war.
European states’ national structures have deteriorated, cultural structures have become corrupted, industrial and production mechanisms have broken down, healthcare systems have collapsed, ruling classes have become detached from the people and the population has become poorer.
“One fifth of the French is mentally ill”
In his statement at the French Parliament following a vote of no confidence that toppled his government, Prime Minister Michel Barnier was revealing the extent of the economic crisis in France: ““The real sword of Damocles is our colossal debt. … If we’re not careful, it will take our country to the edge of the precipice.
Our country is in a very grave situation — €3 trillion ($3.3 trillion) of debt and €50 billion in interest to pay a year. Right now, after education, the second largest item of government spending is the cost of mental health problems, which affect one in five French people. One in every five! Particularly the youth! Mental health issues make up the largest share of health insurance spending”. No need for further words. We have a France where its youth are addicted to drugs, the family structure is being undermined by LGBT impositions and the social security, pension, healthcare and education systems have collapsed.
German industry misfires
For decades, Germany has been seen as a model in terms of industrial production and exports. Its trade relations with Russia, particularly the cheap natural gas and oil it received from Russia, gave Germany a significant advantage in industrial production. However, Europe pushed into quagmire in Ukraine by the US had a heavy cost. The sanctions on Russia have led to high energy prices and put a major strain on German businesses. The Bundesbank reported that industrial production in energy-intensive sectors has shrunk by 10-15% due to high gas and electricity costs, and this trend is expected to continue in 2025. In France, rising fuel, natural gas and electricity prices have been painful for households. The increasing cost of energy has led businesses in both countries offshore in search of cheaper energy and more favorable regulatory environments.
Philippe Crevel writes on lesfrancais.press: “According to a study by the French-German Chamber of Commerce and Industry, one-third of all companies surveyed and two-thirds of industrial companies plan to reduce their investments in Germany”.
One of the fundamental pillars of the country’s economy, Germany’s automotive sector has started losing its global competitiveness. Automotive giants such as Volkswagen, BMW and Mercedes-Benz are consistently losing market share to Chinese manufacturers. According to Goldman Sachs: “Essentially, China has transitioned from a key export destination to a key competitor, and it has gained market share, particularly in sectors where Germany has seen big cost increases”. As stated by the Bundesbank: “Growth in China has weakened demand for German products and reduced Germany’s exports to China”.
European Parliament elections
The defeat of Atlanticist parties and the unprecedented success of nationalist parties in the European Parliament (EP) elections opened the door to the political crisis we see today. The collapse of governments in Berlin and Paris paved the way for political instability and uncertainty. Political balances in Europe has shifted. While the traditional parties of the Atlanticist system, especially the Social Democrats and the Greens, weakened in the EP, nationalist parties gained of one-third of the parliamentary seats.
The rise of the nationalist wave
The biggest concussion in the EP elections was in France. Marine Le Pen’s National Rally (RN) topped the results with 31.4% of the vote and surpassed the ruling Macron’s party by 16% points. Macron’s party, which lost 9% points compared to the previous election, got only 14.6%. A great defeat! Soros-backed Social Democrat candidate Raphaël Glucksmann came third with 13.80%, Jean-Luc Mélenchon’s France Unbowed party came fourth with 9.9%. And the once-largest party in France, the Republicans, came fifth with 7.3%.
The situation in Germany was not much different. The nationalist Alternative for Germany (AfD) party increased its vote share by 5.5 points, becoming the country’s second-largest political force with 15.9%. The Christian Democratic Union (CDU) and the Christian Social Union (CSU) alliance (the Union Party) maintained their first place with 30%. But the ruling coalition parties suffered a total disaster. The Social Democratic Party (SPD), which received 26% in the 2021 general elections, fell to 13.9% in the EP election. which means less than AfD. Similarly, the Greens, who received 20.5% in the 2019 EP elections, lost 8.5 points and dropped to 11.9%. The smaller coalition partner, the Free Democratic Party, got 5.2%.
Another surprise in Germany was “The Union Sahra Wagenknecht – Reason and Justice” party (BSW). BSW, founded by Sahra Wagenknecht after her departure from the German Left Party in January 2024, received 6.2% of the vote.
In other European countries, the nationalist winds blew as well: In Austria, the nationalist Freedom Party of Austria (FPÖ) received 25.4%, Hungarian Prime Minister Viktor Orban’s nationalist Fidesz received 44.9%, and in Italy Giorgia Meloni’s Fratelli d’Italia topped the polls with 28.8%.
Macron’s year of collapse
One hour after the results of the EP elections were announced, Macron accepted his defeat in a televised speech and declared the dissolution of the National Assembly. The early general elections held on June 30 and July 7 produced an unprecedented result since the establishment of the Fifth Republic in 1958. The French electoral system, based on a two-round majority system, had always produced a two-polar parliament until now: the conservative-liberal block and the social-democratic block. One of these blocks would secure the majority and form the government. The globalist neoliberal system was represented one wing on the left and the other on the right.
Nationalist Marine Le Pen’s National Rally party won 11 million votes in these elections and became the first party in the National Assembly with 126 seats. This resulted in a three-polar parliamentary arithmetic. No party or alliance could gain the majority needed to form a government. Any government formed was to be a minority government, doomed to fall due to vote of no confidence. And that’s exactly what happened. The government formed by Macron’s appointee, Michel Barnier, lasted only three months before it was brought down by a vote of no confidence supported by the nationalists and social democrats. Macron’s second appointee, Prime Minister François Bayrou, is expected to meet the same fate. Since the president could not dissolve the assembly a year in advance, it was expected that the government crisis would last at least for six more months. If Macron dissolves the assembly in July 2025 and calls for elections, it remains to be seen what the new parliamentary arithmetic will look like. Amid this escalating political crisis, demands for Macron’s resignation have been rising. However, Macron has repeatedly stated that he will not resign. So, 2024 has been Macron’s year of collapse.
Early elections in Germany
After the defeat of the ruling parties in the EP elections, the end of the government was evident in Germany. Finally, the government formed by the Social Democrats, the Greens and the Liberals under Chancellor Olaf Scholz collapsed on November 6. On December 16, in a vote of confidence, Scholz failed to gain the confidence of the parliament members. According to the law, the German president must dissolve the Federal Assembly within 21 days, and new elections must be held within 60 days after the dissolution of the parliament. President Steinmeier has already approved the possibility of early elections to be held on February 23, 2025. In the election process, surveys show that the Christian Democratic Union (CDU) and the Christian Social Union (CSU) alliance is in the lead with 31%. The nationalist Alternative for Germany (AfD) is second with 19%, while the Social Democratic Party (SPD) and the Greens are seen in third and fourth place with 14-15%.
So the economic crisis turning into a political crisis has brought these two countries to the brink of chaos. Public unrest is on the rise. 2025 is expected to be a year of popular movements and protests.
What awaits in 2025?
The problems Europe will likely face in 2025 can be summarized in four main points:
1- The political and government crisis:
As explained above, for now there seems no available “exit” from the current state of impasse both in France and Germany. Add that AfD will be, currently a 19% vote share in the polls, the second-largest party in the Bundestag in 2025, which means to be a “key player”. In such a case, the Christian Democrats may not necessarily secure a majority to form a government. This would lead to a coalition government. With whom? Perhaps with the Social Democrats.
2 -Economic stagnation and zero growth:
The German economy has shown almost no growth since the end of 2019. According to Goldman Sachs, growth forecasts for 2025 remain bleak, with real GDP expected to increase by only 0.3%. Bundesbank forecasts a more modest increase of 0.2%. The Kiel Institute predicts zero growth. This stagnation is explained by a decline in exports, consumption and investments. Bundesbank emphasizes the urgency of the situation, noting that “fiscal policy is likely to be restrictive this year and in the next two years”. Additionally, the Kiel Institute highlights that the uncertainty surrounding elections has reduced business confidence and further delayed investment decisions.
In France, it is expected that the negative effects of the political crisis caused by the government crisis will continue to impact the economy. With a public debt of 3.228 trillion euros, which constitutes 114% of the GDP, and an annual interest of 50 billion euros, France’s economic management is under a heavy burden. With investments at a standstill, factories closing, and consumption declining, France also seems doomed to stagnation. A 0.5% growth is forecasted for 2025. The budget deficit is expected to be 6.1% of GDP. France already has the largest budget imbalance in the Eurozone. The unemployment rate is also predicted to exceed 8%. Pension reform will continue to a “heavy burden” of French politics.
3- Trump’s trade war:
The pledge of by US President Donald Trump, who will take office on January 20, to impose a 10% tariff on European goods will deal a heavy blow to EU exporters. Trump is threatening the European Union with tariffs unless it buys more US oil and gas. Trump said in a message on the Truth social network, “I told the European Union that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!”
4- The end of the war in Ukraine:
In 2025, the West, defeated in Ukraine, is preparing to sit down at the negotiating table with Russia. Europeans are concerned about the possibility of the US suspending military aid to Ukraine and Donald Trump’s promise to end the war “within 24 hours”, which might force Kyiv to make significant concessions and grantthe Kremlin a geopolitical victory.