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Over a twelve months after the election that delivered Donald Trump a decisive return victory, the Democratic party has still not released its postmortem analysis. But, recently, an prominent progressive lobby group released its own. Kamala Harris's campaign, its writers contended, did not resonate with core constituencies because it did not focus enough on addressing everyday financial worries. In focusing on the threat to democracy that Trumpist populism represented, liberals neglected the bread-and-butter issues that were uppermost in many people’s minds.

A Warning for Europe

While Europe prepares for a tumultuous period of politics from now until the end of the decade, that is a lesson that needs to be fully understood in Brussels, Paris and Berlin. The White House, as its recently published national security strategy indicates, is optimistic that “patriotic” parties in Europe will soon replicate Mr Trump’s success. Within Europe's Franco-German engine room, Marine Le Pen’s National Rally (RN) and Alternative für Deutschland (AfD) top the polls, supported by large swaths of blue-collar voters. But among establishment politicians and parties, it is difficult to see a strategy that is adequate to troubling times.

Era-Defining Challenges and Costly Solutions

The challenges Europe faces are expensive and historic. They encompass the war in Ukraine, maintaining the momentum of the green transition, addressing demographic change and developing economies that are more resilient to bullying by Mr Trump and China. As per a European thinktank, the new age of global instability could require an additional €250bn in annual EU defence spending. A significant report last year on European economic competitiveness called for substantial investment in public goods, to be financed in part by jointly held EU debt.

Such a fiscal paradigm shift would stimulate growth figures that have flatlined for years.

However, at both the pan-European and national levels, there remains a lack of boldness when it comes to generating funds. The EU’s so-called “budget hawks resist the idea of shared debt, and Brussels’ budget proposals for the next seven years are deeply unambitious. In France, the idea of a tax on the super-rich is widely supported with voters. But the embattled centrist government – though desperate to cut its budget deficit – refuses to contemplate such a move.

The Cost of Political Paralysis

The truth is that without such measures, the less well-off will bear the brunt of fiscal tightening through austerity budgets and greater inequality. Acrimonious recent disputes over retirement reforms in both France and Germany testify to a growing battle over the future of the European social model – a phenomenon that the RN and the AfD have happily exploited to promote a politics of nativist social policy. Ms Le Pen’s party, for example, has opposed moves to raise the retirement age and has stated that it would target any benefit cuts at non-French nationals.

Avoiding a Political Gift for Nationalists

Across the Atlantic, Mr Trump’s pledges to protect blue‑collar interests were deeply disingenuous, as subsequent healthcare reductions and fiscal benefits for the wealthy demonstrated. Yet without a compelling progressive counteroffer from the Harris campaign, they proved effective on the election circuit. Absent a fundamental change in fiscal policy, societal agreements across the continent risk being ripped up. Policymakers must avoid handing this political gift to the populist movements already on the rise in Europe.