Europe in 2025: Strategic Realism Takes Hold
Europe entered 2025 politically fragmented, economically fragile, yet strategically energised.Economic recovery was modest, policy churn significant, and the overall positioning marked by internal divisions and mounting external pressures.
The war in Ukraine entered its fourth winter, exposing persistent European divisions, particularly over long-term support and the use of frozen Russian assets. These debates underscored deeper fractures in both threat perception and burden-sharing.
A decisive defence pivot followed the installation of a more isolationist U.S. administration in January 2025. Europe doubled down on strategic autonomy, fully funding the EU’s first Defence Industrial Strategy to reduce reliance on U.S. military hardware and accelerating national defence spending by EU/NATO members toward 5 percent of GDP.
France grappled with a fragmented parliament and a weakened presidency. Germany pursued a defence reset under a new government but fell short of the leadership expected of Europe’s economic anchor. The UK focused on rebuilding ties, with fresh trade agreements with the EU and India signalling renewed outward engagement.
Economic growth across the EU edged just above 1 percent, inflation stayed slightly above 2 percent, and unemployment hovered near 5 percent. A mid-year trade arrangement with Washington capped U.S. tariffs at 15 percent, averting a trade war while reinforcing Europe’s need to diversify trade partners.
The green transition advanced as the EU’s CBAM became fully operational, strengthening climate standards but generating trade friction. On technology, the AI Act, chips manufacturing, AI gigafactories and quantum computing signalled both a strong regulatory push and industrial ambition. Simultaneously, tighter border controls stabilised migration inflows, with irregular crossings declining despite rising levels of global displacement.
2025 marked a turning point in EU–India relations. The historic visit of EC President Ursula von der Leyen with the full College of Commissioners, the first ever outside Europe, set the tone. The momentum continued over the year followed with EAM Dr. S. Jaishankar’s Brussels visit, the second TTC Ministerial meeting, progress on the PSC, and new defence and information-security agreements in the pipeline.
The New Strategic EU–India Agenda, endorsed in October 2025, elevated India to a top-tier security and defence partner. Trade remained central, with an FTA on the horizon in the new year when the Presidents of the European Council and European Commission will be joint chief guests for Republic Day 2026.
Overall, relations between India and the EU are evolving into a vital partnership between like-minded actors in a world increasingly defined by strategic autonomy and multi-alignment.
