Decades of neoliberal policies have produced economic imbalances, social polarisation, and political instability. The right-wing populist backlash sometimes seems irresistible, and now it is reshaping global relations and institutions. Since the return of Donald Trump, the United States has decisively turned away from liberal internationalism, adopting unilateralism and economic nationalism. From Munich to Minnesota, the US administration has also led systematic attacks on modern democratic values, individual freedoms, and social rights, coupled with heightened financial support for European far-right movements.

In response, the EU leadership has championed the concept of “European independence”, yet its operationalisation has been inconsistent. With its focus on “strategic autonomy”, EU sovereignty has mainly been defined through its external dimension, turning a blind eye to internal factors. Meanwhile, EU leaders are eyeing with envy a US-inspired blueprint centred on financialisation and deregulation, casting the welfare state and environmental protections as the culprits behind every economic malaise.

To turn the intellectual tide, leading scholars — Dominique Méda, Thomas Piketty, Katharina Pistor, and Jonathan White among them — warned that “as empires grab resources and discard international law, the EU must forge a New Social Federalism — or become a vassal”. In a new FEPS policy study, we take up this call and outline why, to be politically sustainable, any European sovereignty agenda must articulate its social dimension and reassert the strength of Europe’s social democratic model amidst these crises and transformations.

Europe’s sovereign social policy

As Europe’s social democratic model comes under siege, a broader definition of European sovereignty must be reasserted: one that not only articulates an alternative to the Hobbesian logic of global relations but also embeds this ambition in an agenda linking the defence of democratic freedoms to social prowess and economic inclusion. This is not only a matter of the EU’s internal cohesion but also an essential component of European soft power in the world.

Three core arguments support linking European sovereignty more closely to its social dimension. First, European sovereignty is fundamentally about defining and defending Europe’s own model — its values, rules, and distinct sources of political legitimacy and social cohesion. Second, to be strong outside, Europe must first be solid inside, building the EU’s capacity to weather crises — from economic shocks to wars of aggression — without sacrificing its core values. And third, true sovereignty demands that democratic politics prevail over market power. As oligopoly concerns intensify, Europe must reaffirm its regulatory tradition of supporting and preserving high-quality social services against the appetite of predatory firms.

Not so long ago, EU institutions themselves charted a progressive course that relied on concrete goals and policy solutions to reconcile economic ambition with social progress. The reorientation that followed after 2014 resulted in EU leaders committing to high-level political pledges via the European Pillar of Social Rights (2017) and to concrete action to advance this agenda. The promise was nothing less than the creation of an EU safety net for the safety nets of the member states.

The Porto Summit, held in May 2021, adopted an Action Plan with new social targets to be met by 2030: 78 per cent of people aged 20 to 64 should be in employment; at least 60 per cent of adults should participate in training every year; the number of people at risk of poverty or social exclusion should be reduced by at least 15 million, including at least five million children. Ahead of the summit, we praised the target approach but warned against the assumption that employment tout court would “trickle down” to social welfare. Midway to 2030, Europe needs to take stock of its ambitions.

Social union or a US-style decoupling?

After the Great Recession, great efforts were made to develop the concept of a “European Social Union” into a concrete policy agenda. Solutions such as the Youth Guarantee were brought to the European level, and intellectual milestones were set towards an EU-wide unemployment insurance scheme. During the pandemic, the EU adopted the SURE programme, which helped protect workers from the risks of unemployment and income losses. In the same spring, EU member states agreed on Next Generation EU, a fund raised via common borrowing to support investments — including in social infrastructure and services — across the Union.

Major EU legislative initiatives were also adopted to promote fairer wages and support collective bargaining, ensure a better work-life balance, and improve working conditions for platform workers. Importantly, these initiatives received wide popular backing: drawing on data from a SOLID survey fielded in March 2025, we show that above 70 per cent of Europeans support EU institutions getting involved in various ways — including stronger monitoring — to ensure that their labour rights are respected in their home country.

According to the latest Eurostat estimates, the EU is currently on track to achieve its 2030 employment headline target. In 2024, the share of employed people aged 20 to 64 in the EU had reached 75.8 per cent — a historical high and a noticeable increase since 2017, when it stood at 70.9 per cent. Rising employment rates are broadly good news, though we — and others — also show that this headline figure masks significant disparities and hard trade-offs.

Most telling are the mismatches between employment and poverty trends. Between 2019 and 2024, employment increased by around 0.6 percentage points per year, a pace that — if maintained — would allow the EU to reach its 2030 employment target, with room for some deceleration. By contrast, the AROPE rate declined by only 0.02 percentage points per year. Closing the gap to the 2030 poverty-reduction target would thus require a decline of about 0.6 percentage points per year through 2030. In other words, poverty reduction would need to become 28 times faster than in the period 2019–24.

Reasserting Europe’s social democratic model

These trends highlight that delivering on the long-term objectives outlined in Porto can only succeed if the economic policy path is corrected. So far, however, the EU leadership has failed to articulate a vision of a desirable future and opted instead for a “Draghi light” agenda based on deregulation rather than fiscal capacity-building — setting it on a path leading to social repression and macroeconomic depression, and burdening an already anxious population with more economic, social, and moral pressures.

What Europe needs instead is a new socio-economic steering agenda that promotes its social democratic model as a core element of its sovereignty ambitions. A strategically autonomous Europe requires not only reindustrialisation but also resocialisation. In our “Road Map for Porto 2.0”, we focus on a limited set of genuine priorities: building EU borrowing capacity; tightening economic steering and social rights via a strategic use of public procurement rooted in high social and environmental standards; restoring support for public services at local and regional levels; and repositioning social targets at the heart of the European integration agenda and its governance.

Reducing Europe’s dependencies on the US — in defence, currency, technology, and energy — is as important as overcoming the inferiority complex with the US model of capitalism. Europe possesses many of the assets needed to combat the innovation deficit, alongside the deep scars on political cohesion resulting from unfettered capital concentration and social exclusion. If better integrated, the EU can remain a major industrial and regulatory power, anchored in highly educate d and skilled populations and rooted in social market economies that provide a foundation for long-term investment.

European sovereignty can be meaningfully advanced by drawing on its social resources. Yet, this will require EU policy to also include stronger collective fiscal capacity and uphold regulatory autonomy. By developing the social pillar of the sovereignty agenda, the Union would show European citizens that it cares as much about insulating itself from external turbulence as about its own capacity to address their everyday concerns.

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