What lies ahead for the EU in 2026?

Deutsch

By Manuel Müller

Is there a golden future on the horizon? The EU wants to hope for the best and prepare for the worst.

The new year begins with a joyful occasion for the European Union: Bulgaria will join the eurozone on 1 January. In future, the single currency will be used by 21 of the 27 EU member states. Considering that just over a decade ago there were heated discussions about the possible collapse of the currency area, this is a great success.

“Europe’s independence moment”

But the EU won’t be able to rest on its laurels for long. As the Commission notes in its work programme for 2026, Europe has “to confront a world in its most precarious state for decades”. On the road to what Ursula von der Leyen (CDU/EPP) has somewhat grandly announced as “Europe’s Independence Moment”, the EU will therefore have to overcome a whole series of foreign policy challenges – ranging from Russian aggressivity to the shaky ceasefire and ongoing humanitarian crisis in Gaza to the loss of the US as Europe’s most important global ally.

A few days ago, the European Council took an important, albeit laborious, step when it agreed on a €90 billion aid package to support Ukraine – financed by joint EU debt (another achievement that hardly anyone would have thought possible a decade ago) as part of an enhanced cooperation between all member states except Hungary, Czechia, and Slovakia. This should ensure that Ukraine’s defense does not fail due to financial constraints, at least for now. Still, bypassing the veto threats of individual member states in order to be able to respond adequately to the developments in the war remains one of the EU’s greatest challenges in 2026.

A roadmap to defence readiness

In view of the increase in suspected Russian hybrid attacks, European defence policy must focus not only on supporting Ukraine, but more and more also on protecting itself. This involves reacting to acute hybrid threats as well as preparing for even worse developments. To this end, the Commission presented a “Defence Readiness Roadmap 2030” in autumn, which includes some first significant milestones for 2026. In light of the latest US security strategy, all EU states should have realised by now that the days when defence policy could primarily rely on the NATO framework and the US are over.

An interesting detail: In 2026, the six-month rotating presidency of the Council of the EU will be held by Cyprus and Ireland – two neutral states that have traditionally shown little interest in an active defence policy. However, Ireland has significantly increased its military spending in recent times, and the Cypriot President Nikos Christodoulides (–) has even raised the possibility of his country joining NATO. Therefore, we should not expect the two Council presidencies to call the EU's current defence policy into fundamental doubt.

Mercosur agreement hanging in the balance

In any case, even as the EU is increasingly focused on “independence”, it will still need friends and economic partners around the world. A key tool for such strategic cooperations is the Global Gateway programme, through which the EU finances investments in infrastructure projects worldwide. The Council recently approved a list of 256 “flagship projects” for 2026.

But despite this fleet of flagships, major advances in establishing global partnerships are faltering. In particular, the trade agreement between the EU and Mercosur, the South American economic community, which has been in preparation for many years, is hanging in the balance due to reservations from Italy, France and Poland, while the Brazilian government is growing increasingly impatient with the delays.  Nevertheless, the Commission hopes that a breakthrough will be achieved and the agreement will be signed in January 2026.

Pivotal election in Hungary

In domestic affairs, the coming months offer the EU its last opportunity to finalise legislative procedures before the “super election year” of 2027, when potential changes in government in France, Italy, Spain and Poland, among other countries, could profoundly change the composition of the Council. But even 2026 will already be a significant electoral year.

In April, the parliamentary elections in Hungary will not only determine the fate of Viktor Orbán (Fidesz/P), but also the prospects for democracy and the rule of law in the country. The opposition party TISZA (EPP) is currently well ahead of the ruling Fidesz (P) in the polls. But will Orbán, who has spent years trying to consolidate his power by any means necessary, simply accept being voted out of office in a democratic election?

In addition, parliamentary elections are scheduled for 2026 in Sweden, Denmark, Latvia, Slovenia and Cyprus; snap elections might be called in France and Spain. Also the German regional elections in Saxony-Anhalt and Mecklenburg-Vorpommern in September will be significant for Europe as a whole: If the far-right AfD (ESN) succeeds in forming a state government for the first time with the help of the left-conservative BSW (–), this is likely to considerably destabilise the largest EU member state.

Far-right alliances in the European Parliament

Meanwhile, in the European Parliament, alliances with far-right parties have become increasingly commonplace. During the 2024 European election campaign, the centre-right European People’s Party (EPP) had stated that it would only cooperate with right-wing parties that were “pro-Europe, pro-Ukraine, and pro-rule of law”.

By now, however, little remains of the firewall against the far right. Votes are increasingly being won by majorities consisting of the EPP and all three far-right groups (ECR, PfE, ESN) – even on high-profile legislative decisions such as the Omnibus I package in November, which led to significant environmental deregulation under the banner of “simplification”.

Controversial “simplification” and deregulation

The dispute over the simplification agenda is likely to continue in the new year: The Commission has introduced a number of other “omnibus” proposals, which will now make their way through the legislative process. Here, too, one key aim is to ease the burden on companies by dismantling environmental and consumer protection measures, which is likely to be controversial in many cases – such as, for example, the Commission’s proposal to reverse the planned ban on combustion engines. Also the fact that the Commission is relying so heavily on omnibus procedures (i.e., simultaneous amendments to several existing legal acts) at all, thereby bypassing legal impact assessment requirements, has been met with criticism.

Whether such a controversial agenda will succeed in reuniting the beleaguered grand coalition of the centre in the European Parliament remains to be seen. For now, the far-right parties can not only rejoice in their best-ever poll ratings, they also exert more influence over EU policymaking than ever before.

A “28^th regime”

Not all of the projects on the Commission’s simplification agenda are primarily concerned with lowering the level of regulation. In some cases, the aim is simply to reduce the multitude of differences in national regulations that hamper cross-border economic activity within the European single market. Since the famous 1985 White Paper on Completing the Internal Market, the EU has traditionally relied on harmonisation – the alignment of national legislation – to achieve this. However, this approach often faces political opposition from member states reluctant to relinquish their national regulations.

Recently, an alternative approach has therefore become popular in Brussels: the so-called “28th regime”. This refers to common European regulations that coexist alongside the 27 national systems of the member states without replacing them. An example of this is corporate law, where the form of a “Societas Europaea” (SE) has existed since 2004 alongside national models such as the German Aktiengesellschaft (AG) and the French Société Anonyme (SA).

Race to the bottom in tax and labour law?

In 2026, the EU intends to further expand this approach with the development of a comprehensive “28th regime for innovative companies”, which will cover corporate, insolvency, tax, and labour law. Once adopted, “innovative companies” such as IT or biotech start-ups would be able to choose whether they want to be subject to the national or European legal framework.

The 28th regime is intended to facilitate cross-border activities without requiring immediate full harmonisation from member states. However, given that companies will be able to choose their own framework, this could easily result in a race to the bottom in areas such as taxation and labour law. There is therefore a lot at stake, and tough negotiations are likely to take place in the European Parliament and the Council.

Energy grids, housing construction, free movement, and deportations

Other legislative projects high on the European agenda include the expansion of European electricity grids and “energy highways” as well as the European Affordable Housing Plan, which aims primarily to boost the housing construction industry in Europe. A “Fair Labour Mobility Package” is intended to make life easier for citizens who work in another EU country, for example through a better connection of social security systems. While intra-European migration is being simplified, policy on immigration from outside the EU continues to focus primarily on keeping people out; for 2026, the EU plans to harmonise national return procedures.

A buzzword that we are likely to hear more of in 2026 is the “fifth freedom”. It refers to a right to the free circulation of knowledge, which is intended to complement the traditional “four freedoms” (free movement of goods, services, capital, and labour) of the European single market. What exactly this could mean in practice will be spelt out by the European Commission in a proposal for a new piece of legislation on the European Research Area (“ERA Act”), which it plans to present in 2026.

Debates on the next long-term budget

Negotiations on the next multiannual financial framework for 2028-34 will keep gathering pace in 2026. There are plenty of controversial issues that need to be resolved before 2028, from the size of the budget and sources of revenue to spending priorities and the governance structure. Given the uncertainties of the 2027 super election year, the member states and the European Parliament should make significant progress towards reaching an agreement as soon as possible.

There could also be new impetus for debates on the institutional development of the EU next year when the European Commission presents its long-awaited review of the reforms that will be necessary for EU enlargement. The European Parliament already set out its view on this issue in a resolution last October, and it is time for the Commission and the Council to do the same. However, based on the experience of recent years, we should not expect too much: After all, the member states have still not responded to the Parliament’s treaty reform proposals, which were adopted more than two years ago.

Election of a new UN Secretary-General

Beyond European politics, 2026 also has a special treat in store for all fans of supranational elections: With António Guterres’ (PS/SI) second term coming to an end, the United Nations is set to appoint a new Secretary-General. Ten years ago, when Guterres was first elected, a structured procedure was introduced whereby candidates must be formally nominated in advance by a member state. The civil society campaign 1for7billion attempted to use this to generate a kind of public election debate, which was also covered on this blog at the time.

In 2021, when Guterres was re-elected, there was no such campaign due to a lack of prominent alternative candidates. Now, however, the time has come again: The possible candidates so far are Rafael Grossi from Argentina, who has already been officially nominated by his government, Rebeca Grynspan from Costa Rica, and Michelle Bachelet (PS/SI) from Chile, although it is unclear whether she also has the support of the new Chilean president, José Antonio Kast (PRCh/–). More candidates will likely come forward in the coming months. The 1for7billion campaign has become 1for8billion and is particularly campaigning for the election of a female Secretary-General. The final decision will be made by the UN Security Council in the second half of 2026.

And with this, this blog will be taking its annual winter break until early January. Happy holidays and a prosperous new year to all readers!

Picture: Snow man: Simon Greig [CC BY-NC-SA 2.0], via Flickr.