This is the fourth ESPAS (European Strategy and Policy Analysis System) global trends report since the establishment of this inter-institutional EU foresight process in the early 2010s. As on previous occasions, it is being published in a year when the European Union embarks on a new five-year institutional cycle. The report analyses the key global trends towards the year 2040 and their possible impact on the Union, and sets out some strategic choices and questions that Europe's leaders may need to address in the coming five years and beyond. The report is the product of a unique collaborative process over the past year involving officials from across the nine ESPAS institutions and bodies.

The report sets the centrality of geopolitics as a transversal trend, given the on-going shift from an era of cooperation to an era of competition as well as the deepening fragmentation of the international system and the acceleration of major global transitions. The Report highlights how the borders between EU internal policy and external policy are blurring nowadays and will probably blur even more in the future. The primacy of geopolitics is outlined across the various trends identified in the report: from the economic challenges to demography, from the environmental and climate crisis to the energy transition, from the quest for equality to the technological acceleration, and including health, democracy and the broader changes on how we live.

The publication concludes by outlining the strategic imperatives for the incoming EU leadership. It calls for a multifaceted approach to establish the EU as a smart global power, ensure a socially equitable green transition, navigate economic risks, update the economic model, innovate within a balanced regulatory framework, and strengthen social cohesion.

Between now and 2040, Europe and the world will undergo profound geopolitical, economic, technological and social change. The generation now growing up will live in a world that we can only imagine. However, integrating long-term goals into short to medium-term decision-making can boost our chances of leaving a world that is in better shape to the next generation. The more we understand the challenges ahead, the better we can anticipate and prepare for the changes to come. There are grounds for optimism. The EU has arguably been able to make progress in the past precisely when the challenges seemed overwhelming. When pressed, it can marshal reserves of determination and ingenuity. The next EU leadership will need to draw deeply on these reserves in the years ahead.

Source: EEAS Global Trends to 2040: Choosing Europe’s Future

The EU is engaged in a profound and ambitious transition to achieve climate neutrality and sustainability in the next few decades. This sustainability transition will be key to strengthen the EU's Open Strategic Autonomy, ensure its long-term competitiveness, uphold its social market economy model and consolidate its global leadership in the new net-zero economy. To succeed, the EU will need to address several challenges and make choices that will affect our societies and economies at an unprecedented pace and scale.

The 2023 report provides an overview of the challenges we face and proposes ten areas for action to achieve a successful transition. To equip policymakers with economic indicators which also consider wellbeing, it proposes to adjust Gross Domestic Product (GDP) to take account of different factors such as health and the environment.

This approach will bolster the EU's Open Strategic Autonomy and global standing in its pursuit of a resilient net-zero economy. 

Overcoming key social and economic challenges

As it goes through the sustainability transition – which encompasses both economic and social sustainability ­– the EU is facing several challenges. For example:

• Evolving geopolitical shifts are shaping public opinion and how governments across the globe act, challenging international cooperation on global issues, such as climate change or the energy transition.
• The need for a new economic model, focused on the wellbeing of people and nature, decoupling economic growth from resource use and shifting to more sustainable production and consumption. Up to 75% of Eurozone businesses are highly dependent on natural resources. Economic, social and environmental sustainability are inextricably linked.
• Growing demand for adequate skills for a sustainable future. The availability of workers equipped with appropriate technical and soft skills will be crucial for the EU's competitiveness: 85% of EU firms today lack staff with the competences needed to navigate the green and digital transitions.
• The sustainability transition requires unprecedented investments. Achieving it will depend on securing sufficient funding both from the public and private sectors.

Ten areas for action
Today's report identifies ten areas where our policy response is needed to ensure that the sustainability transition remains focused on the wellbeing of people and society:

1. Ensure a new European social contract with renewed welfare policies and a focus on high-quality social services.
2. Deepen the Single Market to champion a resilient net-zero economy, with a focus on Open Strategic Autonomy and economic security.
3. Boost the EU's offer on the global stage to strengthen cooperation with key partners.
4. Support shifts in production and consumption towards sustainability, targeting regulation and fostering balanced lifestyles.
5. Move towards a ‘Europe of investments' through public action to catalyse financial flows for the transitions.
6. Make public budgets fit for sustainability through an efficient tax framework and public spending.
7. Further shift policy and economic indicators towards sustainable and inclusive wellbeing, including by adjusting GDP for different factors.
8. Ensure that all Europeans can contribute to the transition by increasing labour market participation and focusing on future skills.
9. Strengthen democracy with generational fairness at the heart of policymaking to reinforce the support for the transitions.
10. Complement civil protection with ‘civil prevention' by reinforcing the EU's toolbox on preparedness and response.

Source: European Commission - Press Corner - 2023 Strategic Foresight Report