Leaders embrace two-speed Europe as Macron sets June deadline

European leaders floated a two-speed union as the fastest way to break a political impasse over economic reforms needed to reboot the European economy, as French President Emmanuel Macron set a summer deadline for a broad deal.

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“What we decided today is that between now and June, we will have to finalise the agenda,” Macron said upon departing the castle. “If in June we don’t have concrete prospects and concrete progress, we will continue with enhanced cooperation.”

While the EU is built on consensus at 27, frustrations about the pace of reforms prompted calls to work in smaller groups of countries in what would signal a shift in European politics, favouring action and speed over unanimity.

The so-called enhanced cooperation is a legal provision in the EU treaties that allows at least nine countries to join forces and advance initiatives on their own. It came to prominence in December after EU leaders triggered the mechanism to issue a €90 billion loan to Ukraine without Hungary, Slovakia and the Czech Republic.

“Often we move forward with the speed of the slowest, and the enhanced cooperation avoids that,” Ursula von der Leyen, the president of the European Commission, said in the closing press conference.

Von der Leyen name-checked two legislative files for which the legal tool will be considered: the first phase of the Savings and Investment Union, which aims to create a cross-border system to mobilise private savings into strategic projects, and the 28th regime, which aims to create a uniform framework to set up companies across the bloc.

Enhanced cooperation for the Savings and Investment Union could be considered as early as June if “no sufficient progress” is achieved by capitals, she added.

By her side, António Costa, the president of the European Council, said he would “work to avoid” the emergence of a two-speed Europe as much as possible and always strive for an agreement by all 27 member states.

“This is our first goal,” Costa underlined. “If it doesn’t work, of course, the Treaty of Lisbon offers several solutions. One of them is enhanced cooperation.”

Von der Leyen echoed the sentiment. “Don’t get me wrong, I prefer it by 27,” she said.

Impatience for change

The push to break the deadlock was shared by other leaders who attended the retreat at the Alden Biesen castle in eastern Belgium, heavily focused on competitiveness. Capitals have grown increasingly desperate over the widening gap between the EU and its main global competitors, namely the US and China.

German Chancellor Friedrich Merz, who sought to portray an image of unity with Macron after public disagreements over eurobonds (joint debt) and the “Made in Europe” preference, spoke of a “strong sense of urgency” to effect change.

“The European Union has to act swiftly and resolutely,” he said.

Earlier on Thursday, Danish Prime Minister Mette Frederiksen described a two-speed Europe as the appropriate way to proceed in the current context.

“If you had asked me five or ten years ago, I would have said no,” Frederiksen told reporters. “Now you ask me today, and then I would say yes. “

“Several (countries) can block Europe from doing what is right for Europe, and I think we will see governments that are pro-Russian and that are in reality against Europe”, the Danish leader added, saying it is unacceptable that “we do not do what is needed for Europe because of one country or two.”

Spanish Prime Minister Pedro Sánchez also expressed support.

Further encouragement came from Mario Draghi, the former president of the European Central Bank, who authored a highly influential report on competitiveness and attended Thursday’s summit as a special guest.

During his address to leaders, Draghi recommended exploring the use of enhanced cooperation to “move faster” in high-priority areas such as the Savings and Investment Union, the single market and energy prices, an EU official said.

A two-speed Europe is controversial by nature because it separates member states into different leagues, but it is, in many ways, already a reality. The eurozone and the Schengen Area are the most visible examples of a two-tier system.

Before the Ukraine loan, enhanced cooperation had been used to create the European Public Prosecutor’s Office (EPPO), introduce a unitary patent and harmonise divorce law.

Besides these structures, which are underpinned by legal statutes, European countries regularly team up in informal groupings to defend common interests, such as the “Frugal Four” and the “Friends of Cohesion” during budget talks. The Weimar Triangle, the MED9, the Visegrád group and the Nordic-Baltic Eight are other examples.

Last month, the finance ministers of Germany, France, Italy, the Netherlands, Poland and Spain launched a new coalition, dubbed the E6, to push for “decisive action and swift progress” in four strategic areas, including defence and supply chains.

“We are providing the impetus, and other countries are welcome to join us,” said German Finance Minister Lars Klingbeil, extending an open invitation.