Drivers of economic risk and scenarios for the EU

REGROUP Focus Paper No. 3 (2025)

Faced with unprecedented economic, technological and geopolitical challenges, the European Union (EU) must strengthen its resilience and influence to remain competitive in a rapidly changing world. This focus paper analyses the main economic risks that could affect the EU between now and 2035. The EU faces a combination of internal and external risks, including low productivity, an ageing population and technological backwardness, which are holding back its competitiveness. Its energy dependence, increasing geopolitical tensions and fragmented globalisation compound these vulnerabilities, affecting its economic security, consumer confidence and business value chains. These factors, exacerbated by climate and digital challenges, threaten economic growth and long-term stability. To summarise these risks, this focus paper identifies five drivers: (1) geopolitical instabilities, (2) globalisation dynamics, (3) environmental pressures and climate change, (4) social risks and human insecurities, and (5) technological and digital transformations.

To meet these challenges, the EU must:

• Prioritise the integration of the single market: harmonise regulations in key sectors (energy, communications, financial markets, state aids) to boost investment and competitiveness.
• Invest massively in innovation: mobilise public and private funds to close the technology gap, particularly in artificial intelligence, green technologies and cyber security.
• Diversify and secure its supply chains: strengthen partnerships with countries in the Global South and invest in Europe’s refining and production capacity. Group purchases of raw materials, such as gas, can improve resilience.
• Strengthen the energy transition by accelerating the development of local renewable energy sources and protecting critical infrastructures against digital and physical threats.
• Support developing countries: via the Global Gateway, promote sustainable and inclusive infrastructures while supporting partner countries in their ecological and technological transition.
• Strengthen global governance: promote fair and sustainable trade rules in multilateral institutions and propose a Global Forum on Trade, Development and the Environment.

This focus paper is part of work package 8.