On Monday, December 23, French Prime Minister François Bayrou announced the formation of the country’s fourth government for 2024, maintaining the political trajectory of the past seven years. The new cabinet comprises “Macronites,” key allies from previous administrations, and two former prime ministers, reinforcing continuity in governance.

The collapse of Prime Minister Michel Barnier’s government earlier this month, prompted by a no-confidence vote, appeared to signal opposition demands for substantial change. However, Bayrou’s cabinet largely maintains the status quo. The team is composed of pro-Macron figures, Bayrou’s confidants, seasoned conservative politicians, and other familiar faces, indicating that President Emmanuel Macron’s political line remains unaltered.

Expectations that the government might open up to social democrats were unmet. This iteration is less politically diverse than Barnier’s administration, which lasted only two and a half months. Former Prime Minister Élisabeth Borne, who handed over power to Gabriel Attal in January 2024, returns as Minister of Education, Research, and Innovation. Another former Prime Minister, Manuel Valls, will oversee Overseas Territories. Once a socialist, Valls has faced criticism for what some perceive as “political opportunism.”

Key ministerial appointments include Gérald Darmanin transitioning from Interior Minister to Justice Minister, Conservative Bruno Retailleau stepping into the Interior Minister role, and Eric Lombard, a former banking executive, taking over as Minister of Economy and Finance. He will collaborate with Amélie de Montchalin, the former EU minister and France’s permanent representative at the OECD, to prepare the 2025 budget.

Many ministers retained their posts, including Defence Minister Sébastien Lecornu, Culture Minister Rachida Dati, Labour Minister Catherine Vautrin, Agriculture Minister Annie Genevard, Foreign Minister Jean-Noël Barrot, and Europe Minister Benjamin Haddad.

This cabinet’s makeup raises questions about its stability. The New Popular Front (NFP), a left-wing coalition, is poised to oppose the liberal 2025 budget unless the controversial 2023 pension reform—raising the retirement age from 62 to 64—is suspended. Bayrou has expressed openness to “tweaks and improvements” but ruled out halting the reform entirely.

The National Rally (RN), led by Jordan Bardella, has adopted a watchful stance. While it declined coalition talks, it offered conditional support to Bayrou’s government, similar to its approach with Barnier’s administration. However, tensions arose over Xavier Bertrand’s potential appointment as Justice Minister, a move the RN opposed. Bertrand refused to serve, citing his values and unwillingness to align with a government influenced by Marine Le Pen’s party.

Bayrou has set a goal to reduce France’s budget deficit to approximately 5% of GDP by the end of 2025, down from over 6% in 2024. Speaking to BFM TV, he emphasized the need to cut “inefficient public spending” and floated the possibility of temporary corporate tax increases to achieve fiscal balance.

Eric Lombard echoed this sentiment during his swearing-in ceremony at the Finance Ministry, stating, “We must reduce the deficit without killing growth. It is this balance that we must seek, and this is what the 2025 budget entails.”

Lombard’s extensive financial background includes leadership roles at BNP Paribas and insurance giant Generali. Most recently, he headed the French public investment fund Caisse des Dépôts, focusing on public housing, infrastructure, and green projects.

Bayrou faces an uphill battle in securing parliamentary support for the 2025 budget and broader governance goals. His reliance on opposition forces, particularly the RN, has sparked criticism and uncertainty. RN leader Bardella dismissed the new government as a “failed coalition,” setting the stage for contentious months ahead.

Increased demand due to cold weather and reduced liquefied natural gas (LNG) imports by sea are causing the European Union (EU) to deplete its gas storage reserves at the fastest rate since the energy crisis three years ago.

The Financial Times (FT) cites data from Gas Infrastructure Europe, indicating that gas volumes in the bloc’s storage fields have dropped by approximately 19% between late September and mid-December, the traditional end of the filling season in gas markets. In contrast, the previous two years saw single-digit declines during the same period, supported by milder-than-average winters and reduced industrial demand due to elevated prices.

“Europe has had to rely much more heavily on underground storage this winter than in the past two years to compensate for the decline in liquefied natural gas imports and meet stronger demand,” explained Natasha Fielding, head of European gas pricing at Argus Media.

Europe’s reliance on stored gas reserves is further intensified by increased competition for LNG imports from Asia, where lower prices have attracted buyers. This shift has reduced European imports and necessitated greater use of existing reserves.

Currently, the EU’s gas storage levels stand at 75%, which is slightly above the 10-year average before efforts to reduce dependence on Russian imports. A year ago, storage levels were close to 90% in mid-December.

European gas prices have plummeted by approximately 90% compared to the peak prices of over €300 per megawatt hour during the summer of 2022 energy crisis. However, the rapid depletion of storage this winter raises concerns about the challenges and costs of refilling reserves for the next heating season.

Market dynamics reflect these challenges: traders are already pricing gas for summer delivery at higher rates than for the following winter, signaling rising replenishment costs.

The European Commission mandates that EU countries fill their gas storage facilities to 90% capacity by early November. However, some member states have lower targets, further complicating regional supply strategies.

A substantial portion of Europe’s gas now comes as LNG, which is increasingly influenced by geopolitics. The United States, the EU’s largest LNG supplier, has demanded long-term commitments to purchase U.S. gas or face potential tariffs. Qatar, the third-largest supplier, has threatened to halt shipments if the EU enforces new regulations penalizing companies that fail to meet environmental, human rights, and labor standards.

Additionally, colder weather conditions and the Dunkelflaute—periods when renewable energy generation is minimal—have driven up gas demand for power generation. Anne-Sophie Corbeau, a global energy researcher at Columbia University, reported that industrial gas demand in nine northwest European countries rebounded by 6% year-on-year from January to November 2023.

The rate of gas depletion varies across member states. The Netherlands has seen a 33% drop in stored gas levels since winter began, while France has experienced a 28% decline.

Looking ahead, Russian gas supplies via Ukraine—currently accounting for around 5% of EU imports—are expected to cease at the end of 2024 when the transit agreement expires. While Andreas Guth, secretary-general of Eurogas, suggests there is no immediate concern about this supply interruption, he acknowledges that every marginal volume of gas will impact storage replenishment efforts.

Ahmetcan Uzlaşık, Brussels

The European Council gathered in Brussels on December 19, 2024, bringing together EU leaders to address a packed agenda of critical issues. The meeting focused on pressing topics, including the war in Ukraine, tensions in the Middle East, and the EU’s evolving role on the global stage.

Discussions also centered on enhancing resilience, improving crisis prevention and response mechanisms, managing migration, and other key matters shaping the Union’s priorities. As usual, the European Council set the path for EU’s global engagement and priorities in the current geopolitical context. Policy analyst Fatin Reşat Durukan shared his perspectives on the European Union’s trajectory for 2025 in an interview with Harici.

Anti-Michel Camp is set

The new European Council President, Antonio Costa ran his first European Council meeting.

Former European Council President Charles Michel had been heavily criticized for his way of organizing the European Council meetings. The new European Council President, Antonio Costa, the former Portuguese Prime Minister, so far casted a spell on the leaders with his way of work. Charles Michel was also known for his rivalry with Commission President Ursula von der Leyen during his tenure.

European Parliament President Roberta Metsola praised European Council President António Costa for his efforts to start meetings on time and streamline summit discussions, allowing leaders to focus on political priorities rather than lengthy text negotiations, a shift she called “quite rare.”

Former European Council President Charles Michel declined an invitation to join a group photo commemorating the Council’s 50th anniversary, according to POLITICO.

The Presidency of the European Council means a lot inside the Brussels Beat, as it sets the strategic direction and has a pivotal role in decision-making in macro matters. The summit was also concerned in that sense as experts indicated that the current political landscape in Europe needs leadership as Germany and France are in political and economic turmoil.

Ukraine Remains Central to EU Discussions

Ukraine remained a central focus of the discussions, as it has been in recent years. The European Council released a separate press release for the conclusions on Ukraine.

Ukrainian President, Volodomyr Zelenskyy had attended the first part of the European Council meeting, on an invitation from the new European Council President.

Speaking alongside European Council President Antonio Costa, Ukrainian President Volodymyr Zelensky stressed the importance of unity between Europe and the United States to achieve peace in Ukraine, noting that European support would be challenging without U.S. assistance and expressing readiness to engage with President-elect Donald Trump once he takes office. Costa, too, re-affirmed Europe’s commitment to supporting Ukraine, pledging to do “whatever it takes, for as long as necessary,” both during the war and in the peace that follows.

The Ukrainian President also stated that Ukraine needs 19 additional air defense systems to safeguard its energy infrastructure, including nuclear power plants, from Russian missile strikes.

Kaja Kallas, EU’s foreign policy face, emphasized that Russia is not invincible and urged Europe to recognize its own strength, warning that premature negotiations could result in a bad deal for Ukraine. She stressed the need for a strong stance, noting that the world is watching Europe’s response.

The EU leaders then continued their discussion on Ukraine without Zelensky.

“China would be only winner from a EU-US trade war” says Kallas

Upon her arrival, EU’s top diplomat Kaja Kallas warned that China would be the only beneficiary of a trade war between Europe and the United States, emphasizing that such conflicts have no true winners. Responding to U.S. President-elect Donald Trump’s tariff threats, she noted that American citizens would also bear the consequences, urging caution in trade relations.

“In 2025, we need to step up”

At the European Council meeting, European Parliament President Roberta Metsola urged EU leaders to “step up” in 2025 to solidify Europe’s position on the global stage.

Turning to the EU’s broader neighborhood, she warned of Russian interference in Moldova, Georgia, and the Western Balkans, advocating for accelerated enlargement efforts. Metsola celebrated the historic integration of Romania and Bulgaria into the Schengen Area and underscored the importance of European leadership in addressing crises in Belarus, the Middle East, and Syria. “Now is our moment to step up,” she declared, urging unity and decisive action for Europe.

Leadership void in the EU

Durukan highlighted the significant leadership challenges facing the EU in 2025, particularly stemming from political crises in Germany and France. “Political crises in France and Germany have created a leadership void, making it harder to tackle economic problems. In France, the government collapsed after a no-confidence vote, while in Germany, the coalition broke down, leading to early elections in February 2025. The economic outlook is not great either, with the OECD cutting growth forecasts for Germany and France.The return of Donald Trump as U.S. president adds more complications, with potential trade tensions and shifting global dynamics”, he explained. These disruptions have created a leadership void, complicating the EU’s ability to address broader economic and geopolitical issues.

He also pointed to financial instability, noting that the OECD has cut growth forecasts for Germany and France. “Draghi’s report suggests that the EU needs to invest €750-800 billion annually to stay competitive,” The challenges of implementing such a plan amidst political disagreements might be compelling for the Union.

Despite these obstacles, he acknowledged ongoing efforts to strengthen the EU’s strategic independence, including initiatives like the EU-Mercosur trade agreement and technological leadership. However, he cautioned that political divisions and the rise of far-right parties are eroding confidence in the EU’s unity and global standing. “The coming months will be crucial,” he noted, as the bloc navigates both internal and external pressures.

Ukraine aid sparks future division concerns

On the European Council’s reaffirmation of support for Ukraine, Durukan highlighted the €50 billion aid package for 2024–2027 and plans to allocate €18.1 billion in 2025 as evidence of the EU’s commitment. “The emphasis on ensuring Ukraine’s participation in decisions about its future is a clear message of solidarity,” Durukan said.

However, he pointed to obstacles posed by diverging interests among member states, particularly Hungary’s resistance, as potential stumbling blocks. “The prolonged conflict, economic pressures, and domestic political shifts could further deepen these divisions in the coming months,” Durukan told.

Climate action amidst constraints

The conclusions also stressed on the importance of increasing the number of natural disasters due to climate change and environmental degradation. France and Spain have faced significant challenges in recent months due to natural disasters. The EU has to balance the budgetary constraints and rising defence spendings with its climate goals in 2025.

“The EU is taking decisive steps to achieve its climate goals through legal frameworks such as the European Climate Law and the “Fit for 55” package. In addition, aiming to reduce greenhouse gas emissions by 55% by 2030, the EU will implement CBAM starting in 2026, which will introduce a carbon price on imports. This system, therefore, will prevent carbon leakage and promote global climate action,” Durukan explained.

In light of the increasing defence spendings, Durukan, “the EU integrates energy efficiency and renewable energy use in military facilities, thus aligning security with sustainability. Furthermore, the European Scientific Advisory Board on Climate Change will monitor progress and provide independent scientific advice, enhancing transparency”, said Harici.

Looking ahead, he emphasized the importance of the new Commission setting 2040 climate targets and sector-specific roadmaps. “Achieving these goals will require a focus on sustainable competitiveness and just transition reforms to ensure inclusivity and economic viability,” Durukan concluded.