European Commission President Ursula von der Leyen gave a wide ranging EU State of the Union address on September 16 calling for more investment into Europe’s floundering economy and warned that “we are surrounded by enemies” as the Russian hybrid war starts to cross Eu borders.

The organising theme of the speech was European independence: reducing strategic dependence on Russia, China and imported energy; rebuilding European defence capacity; improving economic competitiveness; and ensuring Europe has its own capabilities in AI, critical minerals, finance and security.

The colour was provided by peppering the presentation with a variety of guests: a Ukrainian girl who lost her legs in a rocket attack; the relatives of a dead firefighter pilot; and some shining examples of successful EU start-ups. Speaking in three languages – English, German and French - to underscore the Multikulti nature of the Union, there was than a little bit of theatre in her 71mins performance.

Von der Leyen described the external environment as “an openly hostile world” and said Europe was building an independent Europe with the capacity to act.

Von der Leyen package can be boiled down to nine points:

Canada associate member: Canada will become Europe’s first associate member as it tries to diversify away from Trump’s USA.

Russia/Ukraine: stronger winter support; more air defence; joint Ukraine-EU missile system; new Ukraine defence-industry projects; tighter enforcement of Russia sanctions.

European security: EU version of Nato Article 4; European Security Council; new European security strategy.

Rearmament: European Instrument for Strategic Enablers covering missile defence, transport, refuelling, space and cyber.

China: tackle €1bn/day trade deficit; willingness to use trade instruments; new EU critical-raw-materials corporation and stockpiles.

Economy: complete single-market overhaul by end-2027; faster permitting; €17bn annual regulatory-burden reduction; new Banking Package; deeper investment union.

Energy: double electricity share by 2040; cut fossil-import bill by potentially €260bn/year; accelerate grids, renewables, nuclear and storage.

AI: increase European compute; finance domestic scale-ups; cooperate internationally on frontier-model safety; industrial AI push in five sectors from November.

Climate: stay with existing climate targets; climate-resilience framework; insurance alliance; heatwave plan; water initiative; possible EU firefighting fleet.

Canada

In a surprise move, addressing Canadian Prime Minister Mark Carney, who was seated close by, she proposed “opening the door” to Canada becoming the EU’s first associate member.

The part-time membership idea has been around for decades, and the idea of semi-EU membership has surfaced in different guises – including as a compromise fast-track membership for Ukraine. And some non-member European countries already have tailored relationships with the EU. Norway, Iceland and Liechtenstein are members of the European Economic Area, effectively giving them access to the single market. Switzerland also has a special status. And a decade after Brexit, the UK is still trying to work out who it wants to be but is drifting back into the European fold.

How that will go down with the other countries in the queue remains to be seen. Nine countries are technically in the queue to join the bloc, with negotiations on membership for Ukraine and Moldova accelerating, but still expected to take a decade.

Russia, Ukraine

Von der Leyen put Russia near the centre of the security comments.

“We are surrounded by enemies,” she told the collected MEPs. But Europe was breaking its “toxic dependency” on Russian fossil fuels and portrayed Russian military aggression, cyberattacks, sabotage, drones and disinformation as parts of a broader security challenge to Europe.

The Commission will propose a new European security strategy and a mechanism modelled on Nato Article 4 - a rule that deals with threats rather than attacks and that lets any member country call for an emergency meeting it feels it is in danger.

“Europe needs its own counter-hybrid playbook.” EU governments urgently need agreement on how to respond to incidents below the threshold of bombs falling on houses that nevertheless threaten national security.

She proposed an “Emergency Security Protocol” that could be triggered by one member state, causing all member states to meet and co-ordinate a response. Von der Leyen also said the Commission would develop proposals for a European Security Council, potentially involving the UK, Canada, Norway and Ukraine as well as the EU – a new version of the “Nato-lite” idea of collective security sans the US.

On Ukraine itself, Reuters characterised her pledge as the EU's “strongest-ever support” during what she expects to be the “hardest winter of the war,” ahead of a widely anticipated heavy Russian bombardment just as Ukraine runs out of air defence ammo. Measures announced or reiterated included humanitarian assistance, support for Ukraine's energy and heating systems and stronger air defences.

There were several concrete defence measures for Ukraine:

• The EU has approved the purchase of US Patriot interceptor missiles and von der Leyen said they now need to be delivered urgently, at a time when the US is rapidly burning through its dwindling stock of interceptors in the Middle East conflict.
  Europe wants to reduce dependence on a “single supplier” by developing a cheap, modular missile-defence system jointly with Ukraine.
• The centrepiece is a programme called Freyja, combining Ukrainian battlefield experience and innovation with European technology and production capacity.
• Remaining money from the SAFE (Security Action for Europe) defence loans programme will be used for a new programme of joint projects with Ukrainian companies.
• The EU intends to tighten sanctions against Russia, but von der Leyen placed particular emphasis on enforcing existing sanctions and closing evasion loopholes.

Her description of Russia's summer attacks on Ukrainian cities was unusually explicit: she characterised repeated strikes, including attacks on rescuers, as a deliberate strategy of terror.

EU rearmament and defence

Von der Leyen said EU defence spending has risen almost 80% over the past five years. She said this was generating record investment in European forces and capabilities, larger orders for European industry, more joint projects and greater interoperability.

The important new announcement is a “European Instrument for Strategic Enablers”, aligned with Nato. The focus will be the expensive systems that individual European states often struggle to provide at sufficient scale: air and missile defence, strategic transport, air-to-air refuelling, space and cyber capabilities.

Her argument was that Ukraine has exposed Europe's shortage of precisely these force multipliers and that procurement increasingly needs to happen at European scale rather than through 27 national systems.

The defence agenda therefore has three overlapping strands:

Buy/build more in Europeand aggregate procurement.

Develop strategic capabilities collectively, particularly missile defence, space, transport and cyber.

Build much closer links between the European and Ukrainian defence industries.

Unlike her earlier ReArm programme ramping up spending to €800bn, this speech was all about making better, shared, use of what the EU already has.

China

China received one of the clearest warnings in the speech.

Von der Leyen said the EU's goods trade deficit with China has reached approximately €1bn per day and described the situation as unsustainable. China sold the EU about 2.8 times what it bought. Over ten years, EU imports from China rose 89% (from €295.9bn in 2015) while EU exports rose 37% (from €145.6bn).

She argued that Europe is already experiencing a second China shock, visible in deindustrialisation in European manufacturing regions.

“We will use all the tools at our disposal to rebalance our relationship,” she said. “Words are good. But deeds are better.”

The message was not a call for economic separation from China. Von der Leyen said Beijing's weak domestic demand also makes access to the European market valuable and argued that the two sides have an interest in negotiated solutions. But she said the ongoing dialogue now has to deliver tangible results.

The second China issue was critical minerals. Europe is more than 80% dependent on China for many critical raw materials, rising to around 90% for some rare earths.

The Commission will therefore establish a new European Corporation on Critical Raw Materials to procure and stockpile strategic materials needed for:

• chips;
• batteries;
• electric vehicles;
• clean technology;
• defence.

This makes the China policy increasingly one of de-risking through European capacity and stockpiles, alongside conventional trade-defence measures.

Economy, growth, debt and deficits

While von der Leyen did acknowledge the fiscal problem, but she did not propose a large austerity or deficit-reduction programme. She said higher energy prices and borrowing costs were hurting companies and households and that “clear fiscal choices” will be necessary to ensure fiscal sustainability while protecting investment.

Her immediate emphasis, however, wasgrowth. “Kickstarting Europe’s economy is our number one priority,” she said.

Her diagnosis was familiar from the Draghi report and Letta report, which she commissioned: Europe has enormous savings, an enormous market, strong industries and a major currency, but it fragments its capital, infrastructure networks and purchasing power.

Her prescription included:

• complete the One Europe, One Market overhaul by the end of 2027;
• dramatically accelerate permitting for strategic projects;
• remove national “gold-plating” of EU regulation;
• deepen the Savings and Investments Union so European savings fund European companies;
• introduce a new Banking Package aimed at reducing fragmentation and increasing banks' capacity and appetite for risk;
• expand financing for scale-ups and deep-tech companies;
• reduce administrative costs through the Commission's 12 omnibus simplification packages, which it estimates will save businesses about €17bn annually.

The key economic framing is therefore fiscal sustainability plus protected investment, rather than fiscal consolidation at the expense of investment.

She repeatedly returned to speed. Permitting, financing decisions and grid connections, she argued, now determine where companies invest and where jobs are created. “We need to move much faster.”

Energy and industrial competitiveness

Von der Leyen explicitly linked Europe's energy prices to industrial competitiveness.

The EU has diversified away from Russian gas, but subsequent Middle East disruption highlighted Europe's broader vulnerability to imported fossil fuels. She said imported fossil energy had cost Europe an additional €90bn since the latest Middle East conflict began, without providing additional energy.

Her prescription is not renewables alone. She explicitly backed a technologically neutral mix including:

• renewables;
• nuclear;
• biomethane;
• other domestically produced clean energy.

The target is to double electricity's share of European energy consumption by 2040, which the Commission estimates could reduce the fossil-fuel import bill by €260bn a year.

Europe added more than 80 GW of renewable capacity last year, but von der Leyen said six times that amount is currently waiting for a grid connection. Hence the emphasis on a new grids package, storage and faster connections.

The industrial-policy argument is important: energy independence, lower energy prices and competitiveness were presented as essentially the same policy problem.

AI

AI was treated as both a competitiveness issue and a national-security issue. Von der Leyen described AI as a foundational technology for the economy and security and said Europe has to remain in the global race. But she also adopted the increasingly cautious position being taken by some frontier-model developers.

She highlighted hacking capabilities, adversarial use and self-improving systems, and said Europe should work with Canada, Britain and other partners on model evaluation, verification, early warning and AI security. She also plans to bring the major frontier labouratories together to discuss ways of “pacing the frontier”.

At the same time, Europe will:

• massively increase computing capacity;
• use new combinations of public and private capital to fund promising European AI companies;
• continue work on AI gigafactories and technology sovereignty;
• concentrate industrial AI deployment in five sectors: health, transport, agri-food, advanced manufacturing, and defence & space;
• announce new initiatives covering those sectors in November.

Von der Leyen's distinction was between winning the frontier-model race and capturing the economic value of AI. Europe may not have to invent the dominant foundational model, she argued, if it can use its manufacturing base, industrial data and sector expertise to apply AI throughout the real economy.

She gave an example of going to the doctors. You want an AI-assisted doctor, but you don’t want an AI to operate on you and cure your cancer. “We want AI with human agency,” she said to round of applause. AI should help doctors with diagnosis and data but not replace the human doctor making the decision.

There is also a labour-market strand. She promised a Quality Jobs Act before the end of 2026, with the argument that AI should raise job quality and skills rather than simply displace workers.

Climate

Von der Leyen has been a champion of the climate fight in Brussels for years, but has been forced to backtrack somewhat as the EU economy tanks. However, she pushed back in her speech, firmly rejecting calls to abandon the EU's decarbonisation targets.

“Europe can, must and will stay the course on its climate targets,” she said.

The EU's legally binding 2040 target, adopted earlier this year, is a 90% net reduction in greenhouse-gas emissions compared with 1990, with climate neutrality targeted for 2050.

But the emphasis of today's speech moved significantly towards adaptation and resilience following the 2026 summer.

Von der Leyen cited:

• 660,000 hectares burned;
• roughly 12mn tonnes of crops lost;
• more than 35,000 additional deaths during heatwaves;
• Europe warming at around twice the global rate.

The Commission will present a new climate resilience framework next month, identifying 100 particularly vulnerable European territories and assessing the risks and the appropriate level of government for managing them.

Further measures include:

• a Climate Insurance Alliance — currently only about 25% of catastrophe losses in Europe are privately insured;
• a European Heatwave Plan;
• improved early-warning and health systems;
• a new European Water initiative — von der Leyen said European water networks lose almost one litre in four through leakage;
• possible creation of a European Firefighting Fleet.

On the economics story, she did not offer a detailed solution to Europe's high public-debt and deficit problem. She acknowledged that fiscal sustainability will require difficult choices, but the economic programme she actually spent time on was investment, productivity, cheaper energy, deeper capital markets, fewer barriers and faster innovation. In other words, the Commission's stated route out of Europe's fiscal bind is substantially more growth, while trying to preserve investment as governments repair their finances.