European Commission President Ursula von der Leyen delivered her annual State of the Union address to the European Parliament in Strasbourg this week, outlining the Commission’s priorities for the year ahead and taking stock of progress since the current Commission term began in December 2024. The speech covered defence, competitiveness, energy, migration and the rule of law — the defining issues of the current political moment — and made commitments that will shape the EU legislative agenda through 2027. Here is what was promised, what was conspicuously absent, and what the commitments actually mean in practice.
- The State of the Union address has been delivered annually by the Commission President since 2010, modelled on the US State of the Union.
- Von der Leyen’s 2026 address was her seventh as Commission President, making her the longest-serving holder of the role since Jacques Delors.
- The Commission proposed three major new initiatives in the speech: a European Defence Investment Bank, a Digital Single Market Acceleration Act, and a Water Resilience Strategy.
- The EU’s legislative output in 2025 was the lowest in a decade, reflecting the new Parliament’s greater scepticism of regulatory expansion.
- Fourteen legislative proposals from the previous Commission term remain pending in Parliament or Council, creating a significant backlog.
Defence: the centrepiece commitment
The announcement of a European Defence Investment Bank drew the most attention and the most applause in the chamber. The proposed institution would provide long-term financing for European defence industrial capacity — filling a gap that commercial banks, constrained by ESG frameworks and regulatory capital requirements, have been reluctant to fill. The proposal acknowledges what our rearmament analysis and EU defence integration coverage have tracked: defence spending is rising, but the industrial capacity to convert that spending into deployed capability is the binding constraint. Whether a new bank resolves that constraint — or whether the bottleneck lies in engineering talent, materials, and planning approvals rather than finance — is debated by defence economists.
Competitiveness: the Draghi agenda advances
The Digital Single Market Acceleration Act, proposed to remove remaining national regulatory barriers to cross-border digital services, is the Commission’s clearest response to the productivity gap examined in our US competitiveness analysis. If adopted, it would require member states to harmonise licensing requirements for digital service providers and create a single registration mechanism for companies operating across borders. Industry associations broadly welcomed it; national regulators in several member states were noticeably less enthusiastic.
What was not said
State of the Union addresses are as revealing in their omissions as their announcements. Von der Leyen said little about EU enlargement — the Western Balkans accession process discussed in our Balkans analysis received a single sentence. The gender pay gap — despite the Pay Transparency Directive entering implementation this year — was not mentioned. And the Commission’s approach to the China trade relationship was described in language that papered over the significant member state disagreements that have constrained effective policy.
The trend that matters
The most significant structural observation about this year’s address is what it reveals about the Commission’s operating environment. The 2024 Parliament is more right-leaning and more sceptical of regulatory expansion than its predecessor. The Commission has adapted — proposing fewer new regulations, focusing more on implementation of existing legislation, and framing every initiative through the lens of competitiveness and strategic autonomy rather than rights or sustainability. Whether this represents sensible adaptation to democratic mandate or a dilution of European ambition is the sharpest political disagreement in Brussels today.
