Europe heads into 2026 under pressure from all sides.
An emboldened United States under Donald Trump, Russia’s unresolved war in Ukraine and the growing influence of the far-right at home are testing the EU’s assumptions about cooperation, security, and its place in a more transactional world.
The year ahead will be about whether Europe can turn uncertainty into leverage. As external shocks reshape the transatlantic relationship and strain the rules-based order, Brussels must also manage its own political fragmentation — from shifting parliamentary majorities to looming budget fights — while trying to remain competitive in an increasingly protectionist world.
The battle lines of the next EU budget
Negotiations on the 2028-2034 multiannual financial framework (MFF) will enter a new phase this semester.
After months of wrangling over the structure of the long-term budget, member states will start talking numbers before the summer. The Cyprus Council presidency plans to submit an updated negotiation MFF text before the European Council summit on 18–19 June 2026.
But familiar battles are resurfacing, threatening progress. Frugal nations such as the Netherlands and Germany have drawn red lines against a larger EU budget — the Commission’s package nears €2 trillion — wary of higher net contributions. Most EU members are also resisting plans to merge agricultural and regional funds.
Ministers will test the waters at the General Affairs Council, with the first one dedicated to the MFF scheduled for 17 March. Leaders hope to reach a final Council deal by 26 December.
Any deal struck in the Council still needs the blessing of the European Parliament, where talks are accelerating as political groups divvy up the budget files.
To pass the MFF, the centre-right European People’s Party (EPP) will need its traditional centrist allies, as the European Conservatives and Reformists (ECR) and far-right groups typically oppose EU funding on principle. That dynamic gives the centre-left Socialists and Democrats (S&D) and the liberal Renew Europe leverage to push for a larger budget, stronger parliamentary oversight and concessions from the EPP.
Simplification under a shifting majority
The Commission is preparing a fresh round of reforms aimed at making it easier to invest, innovate and do business in the EU.
Plans include proposals to overhaul public procurement rules before the summer, introduce a Buy European principle (a French priority) as early as the end of January and create a harmonised legal regime for companies operating across EU borders on 18 March.
EU leaders will also put competitiveness at the top of the agenda at their informal summit on 12 February.
A new wave of omnibus packages covering energy product legislation and EU tax rules is also due before the summer break.
Council and Parliament negotiators are still carving out positions on simplification bills tabled in November and December, spanning environmental rules, the 2035 combustion engine phase-out, medical device standards, chemicals and tech regulation.
The Parliament’s largest group, the EPP, is expected to keep passing motions and legislation with the ultraconservative ECR and far-right Patriots for Europe (PfE), forming an alternative right-wing majority that is upending the chamber’s traditional balance.
That decision to breach the cordon sanitaire — the informal pact to sideline the far-right — has reopened a strategic rift in the centre, with S&D and Renew openly questioning whether a centrist majority still exists.
DG reshuffle chess game
A major reshuffle of senior Commission officials is looming at the Berlaymont.
Commission President Ursula von der Leyen and her powerful chief of staff, Björn Seibert, are working behind closed doors on a plan to move several director generals. The shake-up was triggered by last summer’s departure of Olivier Guersent, the Commission’s competition chief. His exit has sparked a domino effect for filling the powerful portfolio.
Contexte is watching closely for changes at the helm of the Commission’s energy and trade departments, as other director generals jockey for the role.
For von der Leyen, the revamp presents an opportunity to place allies in key positions, further aligning the work of the administration with her political priorities.
It won’t be the only shake-up: a broader overhaul of the Commission’s structure to improve efficiency is also in the works (read our story here).
Trade amid tension
Finalising the EU’s trade deal with the Mercosur bloc is a top priority for von der Leyen, who is set to travel to Paraguay with European Council President António Costa on 17 January to sign the agreement.
But ratification is shaping up to be fraught — France’s long-standing opposition, mounting anger among farmers and deep divisions in the European Parliament are all weighing on the process.
A plenary vote could come as early as February or March. Far-right PfE leader Jordan Bardella has already vowed to table a motion of no confidence against von der Leyen if the deal goes ahead.
Amid Trump’s provocations over Greenland, the Parliament’s trade committee will weigh whether to freeze work on implementing the EU–US trade deal in late January. If it decides against it, the Parliament would aim to finalise its position in the coming months with plenary adoption planned for February.
Beyond Washington, Brussels is also pushing to wrap up a long-delayed deal with India, diversify supplies of critical raw materials — with a focus on Africa and Latin America — and defend its carbon border tax as China steps up its attacks.
Europe’s security assumptions unravel
Just days into 2026, Washington’s sabre-rattling over Greenland — coming on the heels of the abduction of Venezuelan President Nicolás Maduro — has jolted the transatlantic relationship.
Trump’s increasingly aggressive messaging will be on the agenda when EU leaders gather for their first informal retreat of the year on 12 February.
Ukraine will also loom large this semester. Prospects for a peace deal remain uncertain. Meanwhile, EU countries will negotiate the formal conditions of a €90 billion loan to Ukraine following the Commission’s legislative proposal on 14 January.
Elections watch
Slovenia’s parliamentary elections on 22 March could see the return of former Prime Minister Janez Janša to power, with his right-wing Slovenian Democratic Party — affiliated to the EPP — leading polls ahead of incumbent centrist Robert Golob.
On 12 April, Hungary’s parliamentary elections will see opposition leader and EPP MEP Péter Magyar take on populist Prime Minister Viktor Orbán.
Both elections could reshape power dynamics in the European Council, strengthening the EPP’s hand.
Local elections in France on 15 March will also be closely watched, with Marine Le Pen’s far-right National Rally testing President Emmanuel Macron one year ahead of a crucial presidential vote.
Edited by Anca Gurzu