State of the European Union: Five takeaways from Ursula von der Leyen’s speech

The hour-long address is the last of its kind before the next European elections, scheduled to take place between 6 and 9 June.

Mindful of this, the president of the European Commission used the occasion in Strasbourg to offer a detailed retrospective of the main political feats achieved by her executive across the succession of crises that have hit the bloc over the past few years.

She also looked ahead and made several major announcements that suggest her policies have not yet reached an end.

“It is the moment to show them that we can build a continent where you can be who you are, love who you want, and aim as high as you want,” von der Leyen told MEPs. 

“Once again – this is Europe’s moment to answer the call of history.”

Here are the main takeaways from this year’s State of the European Union.

It’s the economy, stupid

The health of the European economy occupied the largest section of the address and permeated virtually every topic the president touched upon.

Von der Leyen’s diagnosis was definitely mixed.

On the one hand, she portrayed the economy as innovative, resilient and well-suited to achieve climate neutrality. But on the other hand, she warned about various obstacles that threaten to hinder the bloc’s prosperity and its ability to stand up vis-à-vis its competitors on the global stage.

Von der Leyen name-checked three big challenges: a widespread shortage of workers, persistently high prices, and the administrative burden faced by small companies.

“Hospitals are postponing treatment because of lack of nurses. And two-thirds of European companies are looking for IT specialists,” von der Leyen said. 

“Eight million young people are neither in employment, education or training. Their dreams (are) put on hold, their lives on standby,” she went on. “This is not only the cause of so much personal distress. It is also one of the most significant bottlenecks for our competitiveness.”

Von der Leyen then said she would appoint an EU envoy for small and medium-sized businesses (SMEs) under her direct command in order to understand better the “everyday challenges” of European companies. She also promised to reduce the reporting obligations placed on SMEs by at least 25% and facilitate access to finance for cutting-edge technologies.

In a surprising move, von der Leyen tasked Mario Draghi, the former president of the European Central Bank and prime minister of Italy, with drafting a report on the future of European competitiveness in the context of the green transition.

“Europe will do ‘whatever it takes’ to keep its competitive edge,” von der Leyen, echoing Draghi’s memorable line at the peak of the European debt crisis.

China under the microscope

In what was arguably the most eye-catching, did-she-really-say-that moment of the whole speech, Ursula von der Leyen announced an official anti-subsidy investigation into the low-cost electric cars coming from China into the bloc.

The flow of these products has been incredibly rapid: Brussels estimates Chinese brands of electric vehicles enjoy a 20% price difference compared to European brands and have amassed an 8% share of the European market, which could jump to 15% by 2025.

“Competition is only true as long as it is fair,” von der Leyen said. “Too often, our companies are excluded from foreign markets or are victims of predatory practices. They are often undercut by competitors benefitting from huge state subsidies.”

The president, who has employed the strategy of “de-risking” to deal with Beijing, reminded MEPs of how Europe’s solar industry went from global leader to second-rate due to the pressure exerted by its “heavily subsidised Chinese competitors.”

The same fate, she warned, could befall Europe’s car industry as the market becomes “flooded” with China-made electric cars whose “price is kept artificially low.”

“And as we do not accept this from the inside, we do not accept this from the outside,” von der Leyen said, prompting applause from lawmakers.

“Europe is open to competition but not for a race to the bottom. We must defend ourselves against unfair practices.”

The investigation could lead to the imposition of tariffs to offset the effects of the Chinese subsidies, which take the form of grants, preferential taxes and low taxation.

Climate neutrality but don’t forget about the farmers

As was the case in all her previous State of the Union speeches, von der Leyen spoke at great length about her flagship policy – the European Green Deal – and the bloc’s long-term mission to become climate-neutral by 2050.

“Four years ago, the European Green Deal was our answer to the call of history. And this summer – the hottest ever on record in Europe – was a stark reminder of that,” she said.

Von der Leyen celebrated the many pieces of climate legislation that have been successfully passed since her arrival in Brussels and praised Europe’s “unique biological diversity” made up of thousands of animal species, forests, moors and wetlands.

“Loss of nature destroys not only the foundations of our life but also our feeling of what constitutes home,” von der Leyen said.

Her passionate comments, delivered in German, appeared to evoke the Nature Restoration Law, which this spring became the target of relentless opposition from right-wing parties and barely survived a knife-edge vote in the European Parliament.

Conservatives had argued the proposed law would decrease food production and endanger the livelihoods of European farmers, fears that were widely shared across social media and debunked by climate scientists, NGOs and the private sector.

Von der Leyen did not mention the law by name but took a moment to commend the contribution made by the agricultural sector.

“Food security, in harmony with nature, remains an essential task,” she said. “I would like to take this opportunity to express my appreciation to our farmers, to thank them for providing us with food day after day.”

Then, she pointedly added: “We need more dialogue and less polarisation.”

A stronger and larger Union

Next to the economy and the climate crisis, Russia’s war on Ukraine was the other overarching topic throughout the address. Once again, von der Leyen promised to sustain financial and military support for Ukraine “for as long as it takes.”

Notably, she avoided new pledges on sanctions against the Kremlin or the use of immobilised assets to pay for the war-torn nation’s reconstruction. Instead, her words served as an introduction to a wider reflection on enlargement and the bloc’s ability to welcome new member states, like Ukraine, Moldova and the Western Balkans.

“In a world where some are trying to pick off countries one by one, we cannot afford to leave our fellow Europeans behind,” she said. “In a world where size and weight matter, it is clearly in Europe’s strategic and security interests to complete our Union.”

The ultimate goal should be a union of 500 million people living in freedom, democracy and prosperity, she added, but getting there will not be an “easy road.”

The president insisted the process of enlargement was and would remain “merit-based” propelled by “hard work and leadership” and refused to commit to any fixed deadline, as Charles Michel, the president of the European Council, did last month.

“We need to move past old, binary debates about enlargement. This is not a question of deepening integration or widening the Union,” she said. “We can and we must do both.”

Von der Leyen said she was open to reforming the EU treaties, as some leaders have called for, but the step was not indispensable in order to guarantee enlargement. As an alternative, the president said the Commission would launch a review process to identify the policy areas that would need to be adapted in a larger union.

“The good news is that with every enlargement those who said it would make us less efficient were proven wrong,” she said.

Keeping AI in check

Von der Leyen didn’t mince words when she spoke about the risks posed by one of the most disruptive technologies in the history of humankind: artificial intelligence (AI).

AI is “moving faster than even its developers anticipated. So we have a narrowing window of opportunity to guide this technology responsibly,” she warned, noting the “vast range” of uses that these systems can be given, “both civilian and military.”

The president then proposed a three-pronged approach to manage and contain AI threats: “guardrails, governance and guiding innovation.”

On guardrails, she invoked the AI Act, the ground-breaking legislation the Commission proposed in April 2021 which is currently undergoing negotiations between MEPs and member states. The act, which imposes market rules on AI-powered systems according to their potential risks for society, is “already a blueprint for the whole world.”

Regarding governance, von der Leyen said the world needed to step up an international body akin to the IPCC, the United Nations panel that monitors climate change and produces advice for governments, so as to develop a “fast and globally coordinated response” against AI’s breakneck evolution.

On the third point, guiding innovation, von der Leyen called for an “open dialogue” between policymakers and AI developers so that the private sector voluntarily commits to a basic set of rules before the AI Act comes into full force.

“We should bring all of this work together towards minimum global standards for safe and ethical use of AI,” she said.