The year of uncertainty: 2024


A weakening global structure

Intensifying great power competition is about to deepen fissures in the international order. Geopolitical tensions between the US and China continue unabated and traditional great powers are facing challenges that undermine their credibility.

What are the implications of these trends for the European Union and how will it position itself strategically in this evolving landscape?
How will it position itself strategically in this evolving landscape?
2024 will be a watershed year for the post-World War II world order. The recent outbreak of violence in the Middle East, as well as in other conflict-prone areas such as Nagorno-Karabakh, Sudan and Niger, point to what UN Secretary-General António Guterres has described as a ‘great fracture ‘in the system of global governance. Great power competition will deepen fractures in the international order, with Russia, China, the United States and Europe promoting different ways of of managing global affairs. But domestic distractions are likely to undermine their ability to influence events both globally and in their traditional spheres of influence in the coming year.

2024 will be dominated by uncertainty over the situation in the Middle East and the war in Ukraine. There is the potential for the Middle East conflict to spill over into the region, both in terms of escalating violence and increasing social unrest in the region. In Europe, tensions arising from the conflict could lead to further social unrest and polarisation. A protracted or wider conflict in the Middle East could divert attention from Ukraine.
Continued clashes on the streets of Western capitals due to external conflicts could increase the sense of insecurity among the European population and, indirectly, make EU enlargement even more difficult. A key question for the EU will be the state in which Ukraine emerges from the winter. The success or failure of the Ukrainian counteroffensive will largely depend on continued and united Western support, although uncertainty over the delivery of key military hardware is likely to continue.
As the war enters its third year, the ability of both sides to maintain a sustained conflict with solid domestic support is likely to come under pressure from both sides.

A protracted war of attrition would test the resilience of Ukraine’s socio-economic structures and its ability to reform them, which is part of fulfilling the requirements for enlargement.
At the same time, significant military losses and the long-term impact of sanctions could affect Russia’s ability to remain fully engaged militarily. A third year of war, with no obvious outcome in sight, could further test the EU’s commitment and resolve.

2024 will be a decisive year for EU legislation on digital and artificial intelligence.
The effectiveness of the EU’s implementation of the Digital Markets Act and the Digital Services Act, as well as the impact of the AI Act, could be key indicators of the EU’s long-term prospects of maintaining its reputation as a global regulatory power.

A global economy in transition

The EU economy, along with the world economy, faces a host of uncertainties inherent in periods of transition. Future challenges include geo-economic fragmentation, changes in trade patterns to pre-crisis monetary policy, supply chain vulnerability, and the rising costs of climate change.
and the rising costs of climate change. These trends raise questions for the European economy and for the upcoming European elections: to what extent is the current economic model able to withstand and adapt to these global changes and shocks?

The geo-economic fragmentation is the first of what Christine Lagarde, President of the ECB dubbed “an era of change and rupture” Although fears of de-globalisation may or may not be exaggerated, 2024 trade tensions, in line with the general trend of increasing trade restrictions over the last decade, have been on the rise trade restrictions over the last decade.
The declining influence of multilateral institutions such as the World Trade Organisation, whose coordinating role is increasingly being questioned, will follow international economic governance. Meanwhile, international trade is increasingly driven by trade in services among advanced economies: services already account for 25% of world trade and have over the last decade far outstripped trade in goods.

Finally, any emerging economic model will have to deal with the implications of climate change and a costly ecological transition. While polls show a high level of public support for climate policies in Europe, the coming year could see a sharper ‘green backlash’ and a slowdown in regulation, as sectoral interest groups express concern about the cost of compliance with environmental legislation and households struggle with the cost of living.
At the same time, the costs of non-intervention are also set to rise. Climate-related extreme events have caused economic losses estimated at EUR 650 billion in the EU over the last four decades, of which more than 110 billion in 2021 and 2022 alone.

A first set of uncertainties concerns the future shape of globalisation itself. The years of “hyperglobalisation” may be over, but are we really heading towards a de-globalised world, or rather a different form of globalisation?
A key question in this respect is which countries will drive the world economy in the coming years: China has been the main engine of global economic growth for decades, and is expected to remain one of the fastest growing economies in the G20; but weakening consumer confidence and uncertainty about its domestic housing market could be signs that this role could increasingly be played in the medium term by other Asian economies.
A key indicator to watch in this regard is whether the Chinese economy can move away from a credit-driven real estate growth model.

The coming year will be marked by uncertainty about the effectiveness of the monetary policies pursued by the major central banks, in particular the Federal Reserve and the European Central Bank. To what extent will it be possible to curb inflation without compromising economic growth?
In Europe, ECB policy may encounter additional difficulties due to its asymmetric impact across member states. In this context, more questions will arise regarding the coordination of fiscal and monetary policy, requiring a delicate balance between inflation, interest rates and growth. The recent compromise on the future of fiscal rules should help, but the ECB, which has already faced criticism from several governments over the past year, is likely to remain under pressure.

A key year for elections

About half of adults are prepared to participate in the 2024 elections, but democracy continues to decline. Some of these elections may have long-term global implications. With highly polarised campaigns, the risks of foreign meddling and the risks of key policies being challenged, this year’s elections carry great uncertainty. What are the implications for the EU and its member states?
for the European Union and its member states? In the face of global uncertainty, will the European elections reflect these precarious times?

2024 will be a crucial election year, with more national elections around the world. Approximately half of the adult population will go to the polls during that year. Yet democracy remains in trouble, stagnant at best and in decline in many places. In Europe, the European Parliament elections mark a change in the institutional cycle, with a new Commission and a series of new appointments in the main EU institutions. Elections in the EU and the US, in particular, will focus political attention in a period of high volatility and global crisis.
In a period of high global volatility they risk undermining the West’s influence in the world. The inevitable political divisions that will result from the elections may reduce the EU’s ability to reach common positions and act collectively.
The EU’s changing institutional cycle means that for much of 2024 it will be less able to rely on leadership and less agile in responding to external developments.

There is also uncertainty about the political direction of other third countries in which the EU has direct interests.
This applies especially to key partners such as India, but also resource-rich nations such as Indonesia, Venezuela or the main such as Indonesia, Venezuela or the world’s leading semiconductor semiconductor supplier, Taiwan. It raises questions about the dynamics of BRICS members, with elections in South Africa, India and Russia.
The extent to which elections in other third countries might fuel anti-Western sentiment (whether spontaneous and/or fuelled by external electoral interference) is also uncertain. Whatever the outcome of elections around the world, they will test the agility of all powers to adapt to new interlocutors and different dynamics.