Beyond the Safety Net: What Europe Must Build When the Old Model Breaks

In Brief

The Bruegel think tank's recent analysis names what many have sensed: Europe's reduced-responsibility model, built on US security guarantees, market access, and institutional stability, has structurally collapsed. The question now is not whether to change, but what kind of change Europe can actually execute. This requires disaggregating the debate into its component parts: what exactly needs building, who pays, and which trade-offs are genuinely unavoidable versus politically constructed.

The structural shift Bruegel describes demands more than policy papers. It demands conversation. That conversation continues at Human x AI Europe in Vienna on May 19, where these questions meet the people building answers.

The Diagnosis Deserves Unpacking

Bruegel's recent analysis offers a stark framing: for decades, EU countries relied on American security guarantees to underinvest in defence, counted on US markets to absorb exports, and anchored financial stability to US-led institutions. This reduced-responsibility model enabled expansion, the single market, the euro. But it also meant Europe never developed robust institutions capable of assuming fundamental responsibilities, particularly around security and macroeconomic stability.

The claim is that these enablers are now gone. The US has shifted from hegemony to primacy, which Bruegel argues means making the rest of the world relatively riskier through systematic weaponisation of economic levers. China has consolidated strategic dependencies in key sectors. The favourable external conditions that supported Europe are unlikely to return.

This diagnosis contains at least three distinct claims worth separating:

Claim one: The external environment has changed structurally, not cyclically. This appears well-supported. US policy volatility, regardless of administration, has become a feature rather than a bug. Supply chain disruptions, semiconductor dependencies, and energy security concerns have moved from theoretical risks to lived experience.

Claim two: Europe's institutional architecture was designed for a different world and cannot simply be patched. This is more contested. Some argue existing institutions have shown remarkable adaptability, pointing to the pandemic recovery fund and energy crisis responses. Others see these as exceptions that prove the rule: emergency measures that required extraordinary political will and remain contested.

Claim three: The solution requires moving beyond the sovereignty-versus-integration framing toward recognising that meaningful sovereignty now requires common European instruments. This is where the real disagreement lives.

Where the Debate Actually Divides

When someone says Europe needs to move beyond the reduced-responsibility model, they might mean several different things:

(a) Common borrowing capacity and fiscal coordination. This is about whether Europe can mobilise resources at scale without unanimous consent for every decision. The pandemic recovery fund created precedent; the question is whether it becomes permanent architecture or remains exceptional.

(b) Defence integration. This ranges from procurement coordination to genuine capability pooling. The gap between rhetoric and reality here remains vast. European defence spending has increased, but fragmentation persists.

(c) Safe assets and capital markets union. This is about whether European savers and investors can access genuinely European instruments, or whether capital continues flowing to US markets for lack of alternatives.

(d) Industrial policy and strategic autonomy. This is where AI, semiconductors, and critical technologies enter the picture. The question is whether Europe can develop its own innovation trajectories rather than replicating US or Chinese models.

These four goals have different costs, different beneficiaries, and different political coalitions. Someone might enthusiastically support defence integration while opposing common borrowing. Someone might champion capital markets union while remaining sceptical of industrial policy. Until the debate disaggregates these positions, participants aren't really arguing; they're performing stances.

The Credibility Problem

Here's where the conversation gets uncomfortable. Recent analysis of the Sustainability Omnibus negotiations reveals a pattern worth examining. In December 2025, the European Parliament and Council dramatically reduced corporate accountability requirements, cutting the number of companies covered by sustainability reporting from 50,000 to fewer than 5,000. The stated reasons: competitiveness concerns, administrative burden, and political shifts following US deregulation.

This creates a credibility gap. Europe's Global Gateway initiative positions itself as a values-based alternative to China's Belt and Road. But if those values are negotiable when competitiveness pressure arrives, what exactly is the alternative offering?

The tension here is real, not manufactured. Europe faces genuine competitive pressure. The question is whether responding to that pressure by abandoning distinctive commitments strengthens or weakens Europe's position. Reasonable people disagree.

The 28th Regime Question

The Jacques Delors Centre's proposal for a "28th Regime" illustrates both the ambition and the difficulty. The idea: create a pan-European legal framework that companies can opt into, operating across the EU under one set of rules rather than navigating 27 national frameworks.

The problem it addresses is real. Legal fragmentation means venture capital investment in EU firms remains six to eight times lower than in the US. Europe produces more tech startups but has around 80 percent fewer scale-ups and 85 percent fewer unicorns. More than a quarter of EU-founded unicorns relocate headquarters outside the EU.

But the 28th Regime proposal also reveals the political economy challenge. Creating an optional European framework that's genuinely attractive requires it to be better than national alternatives in ways that matter to companies. This means either harmonising upward (expensive for some member states) or creating a framework that allows regulatory arbitrage (which undermines the coherence argument).

The Delors Centre suggests focusing on corporate law as a first step, with features like a single online incorporation portal. This is pragmatic. It's also modest relative to the scale of the problem Bruegel identifies.

What Would Have to Be True

For Europe to genuinely move beyond the reduced-responsibility model, several things would need to be true simultaneously:

Political will would need to survive electoral cycles. The structural changes Bruegel describes require sustained commitment across multiple governments and parliaments. Europe's political fragmentation makes this difficult but not impossible.

The efficiency-equity-sustainability balance would need to be navigable. Bruegel explicitly notes that the challenge is reducing Europe's systemic vulnerability to external coercion and shocks in a manner that balances efficiency, equity and sustainability. These three goals often pull in different directions. Pretending otherwise doesn't help.

Innovation trajectories would need to be genuinely European, not imitative. This is perhaps the hardest part. Europe's comparative advantages, in regulation, in social models, in certain research traditions, don't map neatly onto the innovation models that have worked elsewhere. Building something different requires clarity about what different means.

The Question Worth Asking

The Bruegel analysis concludes that the issue is no longer a trade-off between national sovereignty and European integration, but whether sovereignty can still be exercised meaningfully without common European instruments.

This framing deserves scrutiny. It's possible that meaningful sovereignty requires common instruments. It's also possible that this framing is itself a political move, designed to make certain policy preferences appear inevitable rather than chosen.

The more productive question might be: which specific capabilities does Europe need to develop, what are the realistic paths to developing them, and what are the actual trade-offs involved in each path?

That's a harder conversation. It requires acknowledging that some proposed solutions are genuinely costly, that some trade-offs are real rather than false dilemmas, and that reasonable people can disagree about priorities even when they share goals.

The reduced-responsibility model may indeed be over. What replaces it remains genuinely open.