A year ago, the President of the European Central Bank (ECB), Christine Lagarde, issued a stark warning regarding the European Union’s (EU) competitiveness. She noted that internal barriers are throttling innovation, productivity, and investment. In response to France’s proposal to expand the ECB’s mandate to include growth objectives, Lagarde added that monetary policy was inadequate to address these challenges; the EU must therefore undertake structural reforms. These internal barriers limit both services and goods. In some cases, national regulations exceeding EU requirements exacerbate the problem. She recommended the creation of an EU Capital Markets Union. She also advocated for joint European bond issuance, explicitly referencing defence spending. However, such reforms face resistance within the EU. To underscore her warning, Lagarde claimed that Europe is experiencing an “existential crisis!”The former EU Commissioner for Capital Markets, Lord Jonathan Hill, stated that EU regulators and supervisors continue to operate as they did prior to the recent geopolitical shifts (Brown and Butler, Euronews, November 17, 2025). As is well known, German Chancellor Friedrich Merz has advocated for a single EU stock exchange, arguing that the individual national exchanges continue to deter investors. Much of this discussion within the EU stems from the Draghi Report, The Future of European Competitiveness, authored by the former president of the European Central Bank, Mario Draghi, and submitted on September 9, 2024. To date, none of the report’s well-developed recommendations have been fully implemented more than two years after submission. This is one of the major ongoing problems within the EU. Reports, committees, and political opposition make accomplishing things nearly impossible. To the point, the idea of a Capital Markets Union was discussed as early as 2015.The recommended EU Capital Markets Union is not the only element facing significant challenges. Another key recommendation is for decarbonization as part of the EU “Green Deal.” As I reported in “The End of climate alarmism—the Green agenda is unravelling” in the Western Standard, the EU, like Prime Minister Mark Carney, is not dismantling environmental regulations but introducing targeted exceptions for specific aspects. The rationale for retaining regulations that constrain innovation, growth, and productivity is that they can be reimposed in the future. To date, the recommended regulatory reforms have not been implemented.In addition, the formation of the EU Capital Markets Union relies on Europeans shifting their savings from banks into equity funds and pension products. Those who strongly advocate this initiative are clearly eager to seize control of these common savings, enabling substantial profits for the financial sector. Estimates suggest that approximately €775 billion per year could be unlocked..Outside the Brussels bubble, member states — particularly those in Eastern Europe, though not exclusively — remain wary of ceding greater sovereignty to Brussels, which would be required for the implementation of certain recommendations. Families’ and individuals’ savings remain relatively secure in banks, even if higher yields are available through equity funds or other instruments. When one visits an investment company or bank’s investment division in Canada, one is not only informed about the risk involved but also asked a series of questions to determine the level of risk one can tolerate, in addition to a full assessment of one’s current financial situation with regard to any investment. Europeans are therefore likely to be cautious.Compared with the US in terms of investment, competitiveness, and production, the EU is over-regulated and burdened by excessive bureaucracy. This structure favours large corporations while discouraging small startups or medium-sized enterprises from scaling up. The problems are not merely about financing. Slow structural reforms and the fragmented market — stemming from additional national regulations beyond EU requirements — further elevate consumer costs. Higher energy costs associated with decarbonized oil and other sectors in the market will sustain exceptionally elevated prices. The possibility that exceptions may be withdrawn only exacerbates the increasing risk. The US market is enhancing its competitive edge through the application of artificial intelligence to streamline productivity, whereas the EU, lagging behind the US and China in AI development, penalizes advances from both countries by imposing newly created taxes, fees, and regulations that impede them far too extensively.The EU, similar to many fully developed economies worldwide, is confronting a major demographic challenge. The bloc already faces high public debt, which will increase substantially due to new military funding requirements. Moreover, in many member states, the aging population is retiring, necessitating continued expansion of services for the elderly, which places additional pressure on economies already operating at capacity..The underlying reasons for the EU’s relative decline compared with the US are that unelected EU Commission officials in Brussels are unwilling to relinquish their authority or dismantle the existing bureaucracy. It would be a prudent decision for the EU to establish some form of association with Canada, and potentially Australia and New Zealand, to leverage Canada’s substantial wealth.Canada’s economy is approximately $2.32 trillion USD based on GDP, which is roughly similar to Italy’s economy at approximately $2.55 trillion USD. Italy’s contribution to the EU was approximately $22 billion USD for full membership in 2023. One can imagine how many billions of U.S. dollars Canada will need to contribute to the EU based on our GDP and exact status. What will we get for transferring much of Canada’s sovereignty to Brussels? We already have a fairly comprehensive trade deal with the EU and an agreement for military weapons development. Based on a leaked document, an analysis by The Tech Times of the far-ranging agreement between the EU and Canada to be announced in late October concludes, “‘Alliance for the Future’ framing encompasses critical minerals, defence-industrial cooperation, energy, digital trade, Arctic policy, and the associate membership category … representing the deepest Canada-EU integration.” In addition, the EU is working on an EU-China rare-earth export system that could mean that Canada’s rare-earth advantages may be compromised. Closer ties between Canada and the EU are not advantageous for Canada and would, in particular, be detrimental to Alberta because of EU economic and environmental regulations. No one in Canada voted for this far-ranging agreement, and Prime Minister Carney’s bought majority cannot be used as a sanctioning mechanism. The provinces and territories must stand up. Such ties are only Prime Minister Carney’s delusion — a delusion that Canadians may pay for dearly over the coming decades. We could soon be reading about the Canadian “existential crisis” if this delusion is not corrected.Dr. A. W. Barber is the former Director of Asian Studies at the University of Calgary. He is internationally active and has wide-ranging interests.
