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EU Faces Existential Crisis: Economist Warns of 'Reset'

  //business-finance.news-articles.net/content/202 .. existential-crisis-economist-warns-of-reset.html
  Published in Business and Finance on Thursday, February 12th 2026 at 23:34 GMT by The Independent US
      Locales: EUROPEAN UNION, GERMANY, FRANCE, UNITED KINGDOM

Brussels, Belgium - February 13th, 2026 - The European Union stands at a precipice. While many view it as a purely political project, a deeper analysis reveals a crisis far more profound - an existential challenge rooted in demographic decline, economic stagnation, and rising political fragmentation. As highlighted by Berenberg Bank's Chief Economist Holger Schmieding, the EU isn't merely facing difficulties; it's on a collision course with inevitable realities, requiring a fundamental "reset" to ensure its future viability.

For decades, the EU has been lauded as a beacon of peace and prosperity, a successful experiment in supranational cooperation. However, beneath the surface, fundamental weaknesses have been festering. The demographic time bomb is ticking. Birth rates across much of Europe remain stubbornly low, creating an aging population and a shrinking workforce. This strains social security systems, reduces economic dynamism, and ultimately threatens the long-term sustainability of the European welfare model. Without a substantial increase in birth rates, or a carefully managed and integrated immigration policy, Europe's population is projected to decline significantly in the coming decades, eroding its global influence.

Economically, the gap between the EU and global powerhouses like the United States and China is widening. While the US continues to lead in innovation and technological advancement, and China rapidly closes the gap, the EU struggles with sluggish growth, excessive regulation, and a reluctance to embrace disruptive technologies. The EU's share of global GDP has steadily declined, and its competitiveness in key industries is waning. A reliance on established, traditional industries, while offering stability, leaves it vulnerable to disruption and unable to compete in the rapidly evolving global economy. Investment in research and development remains insufficient, hindering the EU's ability to foster the next generation of technological leaders.

The political landscape further complicates matters. The rise of populist and nationalist movements across Europe demonstrates a growing dissatisfaction with the status quo. These movements, fueled by anxieties about immigration, economic inequality, and loss of national identity, challenge the core tenets of European integration. While diverse viewpoints are healthy in a democracy, the increasing fragmentation threatens to paralyze decision-making and undermine the EU's ability to act decisively on critical issues. The internal divisions are not merely ideological; they often manifest as disagreements over fiscal policy, burden-sharing, and the very direction of the Union.

Schmieding's call for a "reset" isn't a plea for minor adjustments. He advocates for a complete rethinking of the EU's purpose, governance, and economic policies. This necessitates a multi-faceted approach. First and foremost, bureaucratic streamlining is essential. The EU is often criticized for its complex regulatory framework, which stifles innovation and imposes unnecessary burdens on businesses. A more agile and responsive policymaking process is crucial to fostering economic growth and competitiveness.

Secondly, substantial investment in innovation and new technologies is paramount. The EU must prioritize research and development, incentivize entrepreneurship, and create a supportive environment for startups and emerging industries. This requires a shift away from traditional industries and a commitment to embracing the technologies that will shape the future, such as artificial intelligence, renewable energy, and biotechnology.

Thirdly, the EU must address the issue of immigration in a comprehensive and effective manner. This involves establishing clear and consistent rules for immigration, integrating immigrants into society, and addressing the root causes of migration. A well-managed immigration policy can help to offset demographic decline and contribute to economic growth.

Finally, fostering a stronger sense of European identity is vital. This isn't about creating an artificial or forced sense of unity, but rather cultivating shared values and experiences that promote solidarity and resilience. This can be achieved through educational initiatives, cultural exchange programs, and a renewed emphasis on the common history and heritage of Europe. The EU needs to demonstrate a clear vision for its future, one that resonates with its citizens and inspires a sense of collective purpose.

The path forward won't be easy. It requires bold leadership, courageous decision-making, and a willingness to challenge entrenched interests. But if Europe truly wants to survive and thrive in the 21st century, it has no other choice than to embrace this fundamental reset. The stakes are simply too high to continue down the current path.