Looking for a positive future perspective (part 1)

May 2024

Talking about the need to  offer desirable future prospects for all people and places in Europe, the new trends report published by the European Strategy and Policy Analysis System (ESPAS) in April makes dire reading. ‘Trends to 2040: Choosing Europe's Future (Si apre in una nuova finestra)’ is the result of a collaborative effort involving nine EU institutions, reflecting a broad consensus on the strategic foresight needed to navigate the complexities of the future.

The ESPAS report provides insights into the global trends that will shape the Europe’s strategic environment over the next two decades. It explores the evolving geopolitical landscape, the implications of demographic shifts, and the urgency of environmental issues, among others. By examining these trends, the report wants to equip policy makers with the foresight necessary to make informed decisions that will steer Europe towards a stable, prosperous, and sustainable future. The report also makes one wonder as to what degree the trends and strategic choices discussed affect European cohesion as they mean different things to different places.

In two blog posts, we look at the trends and the strategic choices that could define Europe's trajectory towards 2040, highlighted in the report. This first blog post reflects on geopolitical realignment, economic shifts and technological innovations and digital transformation, and environmental urgencies.

The second blog post (Si apre in una nuova finestra) addresses issues such as demographic changes healthcare and social wellbeing and concludes with some reflections on territorial implications.  

Geopolitical realignment

Europe's geopolitical landscape is undergoing significant transformations, reflecting a global shift from cooperation towards competition. Geopolitics today is marked by deepening fragmentation. One example is the trend of the word-wide-web increasingly transforming to a splinternet or cyber-balkanisation (see also our blog post in 2022 on technological trends (Si apre in una nuova finestra)). Developments point towards parallel transnational ‘internets’ and technological spheres connecting like-minded parts of the world. This is also reflected the development of artificial intelligence and the production of high-tech equipment incl. chips.

The ESPAS report captures this evolving dynamic, noting how the EU must strategically position itself amidst rising global tensions and emerging threats. The EU faces the critical task of navigating a world where traditional alliances are increasingly strained, and new forms of conflict, such as hybrid warfare and cyber threats, are on the rise. The challenge is to maintain a balanced approach that reinforces alliances while fostering the capacity to act autonomously when necessary. Strategic autonomy in critical technologies and the materials necessary for their production as well as in security and defence is considered essential.

In territorial terms this raises questions as to which places in the EU will be the champions to develop leading competences in the sectors crucial for our strategic industrial autonomy, security and defence. Will that imply increasing geographical concentration tendencies to these places, or what could be strategy to ensure such a move an draw on the full territorial diversity of the EU?

Economic shifts

By 2020, the EU’s share of global GDP is projected to decline from 17.9 % in 2021 to approximately 14.2 %. Furthermore, economic stability is under threat due to geopolitical tensions and transitions towards climate neutrality. The report emphasises the economic challenges posed by the need to shift to net-zero industries and adapt to a new economic order, where digital and green technologies play pivotal roles. Europe faces the dual challenge of fostering economic growth while accelerating its green transition, making strategic investments in sustainable technologies and industries critical.

Among other things, the report points out that economic and technological rivalry between China and the US may lead to a new era of de-risking and re-industrialisation.

The ESPAS report underlines the urgency of adapting Europe's economic framework accordingly, and reassess its economic strategies in light of potential disruptions to global trade and the need for greater technological sovereignty. This includes diversifying supply chains, investing in cutting-edge technologies, and reducing dependencies on external economic powers. Moreover, Europe's green transition, as part of its commitment to achieving climate neutrality, presents both challenges and opportunities. Strategic economic choices will be crucial in determining how Europe can leverage its technological advancements to foster a sustainable economic model that not only addresses environmental imperatives but also generates growth and competitiveness.

In territorial terms, this deepens the question of which places have the best capacities to lead a re-industrialisation, development of cutting-edge technologies and green transition industries. Could diversifying supply chains and nearshoring of strategic productions offer opportunities to spread economic activities and benefits more widely across the EU and help more balanced development and cohesion?

Technological innovations and digital transformation

Technologies are highlighted as the key for the EU’s future in terms of its competitiveness, open strategic autonomy and overall security. Europe is at a crucial juncture in terms of embracing technological innovations and digital transformation, which are pivotal in shaping its future economic and strategic landscape. The ESPAS report highlights the importance of leveraging these advancements to secure a competitive edge while ensuring they contribute positively to societal well-being. Europe's approach to digital transformation involves fostering a robust innovation ecosystem that encourages the development of new technologies while also addressing the risks associated with digital disparities. This means investing in digital infrastructure, supporting start-ups and SMEs in the tech sector, and ensuring that all regions and communities have equal access to digital opportunities. Additionally, the EU faces the challenge of setting global standards for emerging technologies such as artificial intelligence and blockchain, which will play critical roles in the future economy. Strategic choices in technology and digital policy will not only influence Europe’s economic growth but also its ability to manage social and ethical implications of digitalisation.

In territorial terms, also the digital transition will need for further technological innovation will come with clear spatial patterns. Often they first lead to economic and spatial concentration. Indeed, many of the transformations addressed above tend to champion leading areas, big economic players or leading networks of players as frontrunners for the transformation and places where the necessary innovations happen at sufficiently large scale. This implies more spatial and economic concentration and thus more cohesion challenges in the years to come.

Environmental urgencies

Europe is the fastest warming continent in the world. The urgency of addressing environmental and climate challenges is more pronounced than ever, as Europe contends with the escalating impacts of climate change. The ESPAS report calls for the EU to intensify its environmental policies and lead global efforts in sustainability. With the continent experiencing rapid climate changes, including increased frequency of extreme weather events, the EU's policy direction must focus on transformative climate action. This involves substantial investments in green technologies and renewable energy, stringent environmental regulations, and proactive international collaboration to mitigate environmental degradation. The strategies adopted will not only determine the EU's environmental resilience but also its leadership role in global sustainability efforts. As the EU aims to be at the forefront of the green transition, the strategic choices made today will have lasting impacts on the well-being of its citizens and the global community. In that sense, the green transition and transformative climate actions are not only an environmental imperative, but also an economic one.

Again, in territorial terms, the effects of climate change, the needs for climate change adaptation and the potential for transformative climate actions varies. In all works well, this may hold potential for leading tech places to boost green industries, as well as for rural areas for the production of green energy. Importantly, however, transformative actions will require decision-making in which costs and benefits are separated by long time-lags and in parts even by spatial-lags. They require system thinking and solutions which often are about producing collective goods that go beyond the scope of unilateral ‘single-best efforts’ of any player.

to be continued

Next week´s blog post will address issues such as demographic changes healthcare and social wellbeing and concludes with some reflections on territorial implications.

by Kai Böhme