What lies ahead for the EU in 2025?

Brussels: The new EU leadership in Brussels will have a lot on its plate in 2025.It will need to confront the challenges without a strong Franco-German alliance.

For the European Union, the vulnerable Ukraine, a warmongering Russia and the narcissistic Donald Trump will be the three biggest challenges in 2025.

The situation is exacerbated by internal problems such as the sluggish economy, high levels of debt and the political struggles in Germany and France.

In other words, the outlook for 2025 is not promising.

So, what lies ahead for the new team in Brussels?

The president of the European Council, Antonio Costa, and EU High Representative for Foreign Affairs, Kaja Kallas, have been in office since December 1.

Ursula von der Leyen remains in power but her European Commission has been completely reorganized.

According to Steven Everts, director of the European Union Institute for Security Studies, the new team presents at least an opportunity.

“Right now a new leadership is taking office in the EU,” he said. “This is the moment where we can rethink, adapt, and revitalize EU foreign policy.”

The EU has planned to transfer €1.5 billion ($1.6 billion) each month from its joint budget to the state treasury in Kyiv in 2025. In addition, there is a €50 billion loan from the G7 to Ukraine, which will be funded by profits from frozen Russian assets.

Large quantities of ammunition and weapons will also have to be financed by European states in order to help the EU accession candidate Ukraine.

However, this bill could become even larger if the incoming US President Donald Trump acts on his threats and cuts or cancels the USA’s aid to Ukraine.

To date, the United States has financed almost half of the aid to the country.

According to EU diplomats, there is intense speculation in Brussels about how much money might be due.

“We’ll wait and see. We are not properly prepared for Trump,” one EU diplomat said behind closed doors.

In addition to Ukraine, the EU will focus on its own defenses against Russia in 2025.

Andrius Kubilius, the EU’s first commissioner for defense and space, has not been tasked with setting up a European army but rather with better coordinating the armaments and procurement policies of the EU member states.

Many EU states’ budgets are too meager to quickly buy new weapons or increase their number of soldiers. This pressure could increase even further if Trump decides to cut US spending on European defense and demands more contribution from the Europeans.

According to estimates by the Munich-based economic research institute Ifo, Germany alone has a €230 billion deficit in its defense budget in the medium term. In Italy, that deficit is €120 billion; in Spain, it’s €80 billion.

Meanwhile, Germany’s new finance minister, Jörg Kukies, has promptly rejected the idea of some states to finance military spending via additional joint EU debt.

2025 will not only require more military spending but also investments in climate-friendly economic restructuring and economic support, as well as financing reconstruction in Gaza, Lebanon and Syria.

The former head of the European Central Bank, the Italian Mario Draghi, highlighted an investment requirement of €800 billion earlier this year in a dramatic report on the competitiveness of the EU economy. He also recommended more joint borrowing to finance startups in order to bring private investors on board.

However, France and Italy are already facing deficit proceedings from the European Union. Spain could soon join them.

Although Germany remains below the EU’s debt limit, Berlin is not really able to act fiscally due to the upcoming federal election in February. As a result, the future finance minister will not present a federal budget for 2025 until the spring or summer, at the earliest.

Negotiations for the next German government will also delay the EU’s new financial framework.

A trade war with China over electric cars is looming. And a dramatic conflict could arise over punitive tariffs that Trump wants to impose on Europe, China, Mexico and Canada.

However, Valdis Dombrovskis, the EU commissioner for economic affairs, is determined to remind the new US president and his advisers that they would be hurting themselves with tariffs.

“Trade wars are not good for anyone, Trump has to learn that,” he said at an event held by the European Policy Centre think tank. “We have to show him the numbers. Fragmentation of world economy has its consequences. Full scale tariffs could take away 7% of world GDP. You compare that to the thirties (of last century) when isolationatism was fashionable,” he added, referring to the global economic crisis of those years and the rise of Nazism in Germany.

Meanwhile, a little hope was given by the trade agreement the EU signed with the Mercosur group in South America in early December.

Yet, this also still needs to be approved by the EU institutions in 2025.

EU expert Janis Emmanouilidis from the European Policy Centre think tank is not optimistic about the new year.

“The EU has always been a guarantor of compromise. It has lost this ability,” Emmanouilidis said at an event in Brussels in early December, referring to the EU’s foreign policy and military challenges. “The EU is no longer the answer to many things. Politics has become more nationalistic.”

In his view, many people, including those in the EU candidate countries in the Western Balkans, have lost hope the 27-member bloc will actually keep its promises in the future.

“France and Germany are now needed as leading powers in the EU,” he said.

However, France has been weakened by its government crises and Germany’s ability to act is limited due to the federal election in February.

Spain’s minority government could still fail due to problems with the budget. Italy is led by a far-right government. Belgium and Austria only have caretaker governments, and the political situation in Romania remains unclear.

Meanwhile, in the Netherlands, Hungary and Slovakia, EU skeptics are in power.

Hungarian Prime Minister Viktor Orban believes he has made peace in Ukraine more likely by moving closer to Russia during his country’s EU Council presidency. He’s also looking forward to seeing Trump return to the White House.

So far, all it is safe to say for 2025 is that the new year will be an interesting one at best and very likely a stormy one for the EU.