One Europe, Two Speeds: The Race for European Competitiveness

Walking the halls of the Munich Security Conference this year, our teams on the ground didn’t find the usual, reflexive warmth of transatlantic handshakes. Instead, the atmosphere was at times reassuring, but often composed and clinical, a dynamic we later covered at our “Munich to Brussels” roundtable held in partnership with the “Wine & Politics” forum in Brussels last month, featuring guest speakers, former European Parliament Secretary General, Klaus Welle, as well as our own APCO Senior Advisor, former Irish ambassador to the EU Declan Kelleher. There was a palpable sense that the “special relationship” has moved into a into a more complex, independent phase—one where the old optics of automatic alignment are being replaced by a drive for European autonomy in response to a United States which sees its priorities rooted in the Western hemisphere.

It was during this discussion that Kelleher coined the term “variable geometry” to describe the solution emerging from Brussels. In other words, a two-speed Europe where urgency requires some member states to press on with action, resulting in de facto leadership of the whole EU bloc.

We at APCO have been deep in the weeds of this for a while now. If the February Council Leaders retreat at Alden Biesen taught us anything, it’s that the old way of doing business in Brussels, the agonizing wait for 27 countries to agree on every minor detail, may now belong to a bygone era. This does not come as a surprise to many Brussels public policy veterans who have known for some time that it is nearly impossible to build—let alone run—a superpower on a “lowest common denominator” setting. Especially not when your competitiveness is lagging behind.

The Single Market has long faced headwinds, from regulatory “gold-plating” to deep-seated philosophical disagreements to policy approaches. The Draghi and Letta reports, published last year at the behest of the von der Leyen College, finally said the quiet part out loud, that the EU is structurally and fundamentally uncompetitive, and rapidly in decline.

Take the new Savings and Investment Union. A core group of countries is just moving on and integrating capital markets because they must. Then there’s “EU Inc.,” the so-called 28th Regime, which, if all goes according to plan, would enable a startup in Tallinn to set up shop in Milan in two days flat without drowning in three different regulatory languages.

We are currently watching a strategic tug of war that will define the next decade of investment. On one side, France is banging the drum for a “Buy European” approach to strategic autonomy. On the other, a “Made with Europe” coalition including Germany, Italy and the Netherlands, wants to keep the door open to “trusted” partners such as Canada, Norway or Switzerland. In the world of European procurement, “trusted supplier” status is now the most critical label in the room, deciding who wins the contracts for quantum-secure satellites and next-generation data centers.

We are also witnessing a complete re-writing of how European defense governance and its industrial military complex operates. The perennial rule of the 27, requiring unanimity across all member states, has, at least on cohesive security or foreign policy, caused significant paralysis for the EU in an era that demands speed and agility. To escape this, momentum is building to develop a true European of Five or Coalition of the Willing model, prioritizing practical output over ideological purity. This may be the only way to integrate the “Non-EU Four” (Britain, Canada, Turkey and Norway) which provide the military weight central to Western security.

Here’s what our senior counsel are advising our clients to look out for:

• By April 2026, we’re looking at new merger rules for European companies to scale up to punch at the same weight as United States or Chinese giants without being blocked by their own regulators.
• Waiting for a U.S. presidency which is more favorable towards Europe is not a strategy. From the Biden presidency onwards, U.S. isolationism has shown itself to be a structural trend and not part of a one-off Trump presidency. To remain a valued ally, rather than a strategic burden, Europe must “wise up” and transition from a security consumer to a competitive partner.
• As the rhetoric on Ukraine shifts from “victory” to “sustainability,” Europe must quickly translate increased budgets into real-world capability or lose the power to shape its own security architecture.
• The March 2026 European Council Summit to etch into stone the “One Europe, One Market” roadmap.

Brussels, and many EU national governments, are relaying (mostly cohesively) that the era of Europe behaving as a passive market is ending. The “sovereignty” buzzword now also carries gravitas itself moving from event panel discussions into concrete legislative proposals. For companies that get into that “inner circle” of the two-speed movement, the payoff could be significant and, if you’re still waiting for the old, slow Brussels to come back, well, you might be waiting a long time.