Macron Gives Europe Until June to Fix Its Economy — Or He’ll Go It Alone

QUICK ANSWER What’s happening? EU leaders met at Belgium’s Alden Biesen castle on 12 February for an informal competitiveness retreat. French President Emmanuel Macron set a June deadline for concrete economic reforms, warning that France would pursue enhanced cooperation with willing states if all 27 cannot agree. Mario Draghi presented his “pragmatic federalism” vision. Germany and Italy formed a pre-summit bloc of 19 nations pushing deregulation and industrial policy. No formal decisions were taken, but a proposed “28th regime” for EU-wide company law, energy price cuts, and a “Made in Europe” procurement framework are now on the table for the March European Council. The retreat exposed deep fractures — on joint debt, trade protection, and how far Brussels should go to shield European industry from American tariffs and Chinese competition.

There was a castle, a former Italian prime minister, and 27 heads of government huddling under umbrellas in Belgian rain. The choreography of Wednesday’s informal EU leaders’ retreat at Alden Biesen was quintessentially European — grand in setting, incremental in substance, and shadowed by the suspicion that the continent is once again talking about competitiveness rather than delivering it.

Yet this summit felt different. The geopolitical pressure is no longer abstract. American tariffs are active. Chinese industrial subsidies are accelerating. And European GDP growth continues to lag both rivals by a widening margin. European Council President António Costa framed the gathering as “an urgent strategic imperative,” and for once, most leaders appeared to agree on the diagnosis — even if they remain divided on the cure.

The Macron Ultimatum

The sharpest intervention came from Emmanuel Macron. The French president demanded “very concrete decisions by June,” and went further: if the full 27 cannot move together, willing nations should proceed through enhanced cooperation, a mechanism that allows a subset of member states to integrate more deeply without waiting for unanimity.

It was a calculated escalation. Macron has been pushing for permanent joint borrowing at the EU level — reportedly calling for up to €1.2 trillion in annual Eurobond issuance to fund green technology, digital infrastructure, and defence. German Chancellor Friedrich Merz rejected that proposal outright, telling reporters he and Macron “almost always agree” while making clear that joint debt remains a red line for Berlin.

The Franco-German tension is not new, but its texture has shifted. Macron is governing with approval ratings around 15 percent and a minority government unable to pass domestic fiscal reform. Merz, weeks from a federal election, is aligning more closely with Giorgia Meloni’s Italy on deregulation and industrial pragmatism — a pairing that would have been unthinkable two years ago.

The Pre-Summit Within the Summit

In a move that underscored the shifting power dynamics, Meloni and Merz convened a pre-summit meeting of 19 EU leaders — plus European Commission President Ursula von der Leyen — before the formal retreat began. Belgium’s Prime Minister Bart De Wever co-hosted. Eight member states, including Spain, Portugal, and the Baltics, were absent.

The group’s priorities were clear: cut regulation, open trade, and resist the protectionist instincts that France has been championing. Their joint document called for putting industry at the forefront, adopting pragmatic climate targets, and accelerating the EU’s trade diversification agenda — a direct reference to the EU-Mercosur agreement that France continues to oppose on agricultural grounds.

European Parliament President Roberta Metsola distilled the core issue on arrival: “Competitiveness needs capital.” The implication — that Europe’s fragmented capital markets remain the single greatest structural barrier — is one that has constrained business growth across the continent for years.

Draghi’s Return

Mario Draghi, the former ECB president whose 2024 competitiveness report first quantified Europe’s structural gap with the US, returned to present an updated vision he calls “pragmatic federalism.” His original proposal — €800 billion in annual joint investment across green energy, digitalisation, and industrial policy — remains the intellectual foundation of the debate, but implementation has stalled.

Enrico Letta, whose parallel report on the Single Market called for deeper harmonisation and reduced national barriers, joined the afternoon session. Both men urged leaders to stop admiring the problem. Draghi reportedly told the room that enhanced cooperation should be used if consensus proves impossible — aligning with Macron’s position and putting further pressure on holdout states.

What’s Actually on the Table

Three concrete proposals emerged from the day’s discussions, all destined for the formal European Council in March.

First, a “28th regime” — a new EU-wide legal framework that would allow companies to incorporate and operate under a single set of rules, bypassing the patchwork of 27 national regulatory systems. Costa confirmed that leaders agree on “the importance of moving forward quickly this year.” If implemented, it would be the most significant simplification of European business regulation since the Single Market Act.

Second, energy price reductions. The Commission has been tasked with presenting concrete proposals to lower energy costs for European industry, a direct response to the competitive gap with American manufacturers who benefit from structurally cheaper gas and electricity.

Third, a “Made in Europe” procurement preference. A leaked draft of the Commission’s Industrial Accelerator Act, due 25 February, would favour products with local content in public procurement. But the definition of “European” is contested: France wants it limited to EEA countries, while Germany wants it extended to “trusted partners” — a formulation that could include the US, UK, and other allies.

The Credibility Gap

The uncomfortable truth, articulated most bluntly by CNBC’s Silvia Amaro, is that EU leaders have been discussing competitiveness for two years without implementing much of anything from either the Draghi or Letta reports. Former Greek finance minister Yanis Varoufakis put it more starkly: “We have two choices — we are at a fork in the road. We can move in the direction of federation or we can disband the euro.”

That framing is hyperbolic, but the underlying point resonates. European corporates are sitting on approximately €2.6 trillion in cash. European banking M&A just had its biggest year in a decade. The private sector is consolidating at pace, with or without political permission. The question is whether Brussels can match that urgency — or whether Macron’s June deadline will pass with another set of conclusions and no decisions.