The post-neoliberal state is here — now comes the hard part
Reflections on 2025 from an EU vantage point — and what 2026 will test.
2025 wasn’t the year “the state came back”. That line has been doing the rounds since the pandemic, and it now explains less than it reveals.
2025 was the year the post-neoliberal state became easier to see — not because Europe suddenly fell in love with planning, but because strategic dependence stopped feeling like a theoretical vulnerability and started reading like an operational risk.
Across defence industrial policy, export controls, investment screening, and “digital sovereignty”, the EU’s language and instruments increasingly converged on a shared premise: markets do not self-insure against geopolitical shocks; public power has to shape technologies, supply chains, and strategic infrastructures.
The hard part, now, is whether Europe can turn that premise into capability — without sliding into expensive fragmentation.
A useful way to read 2025: Europe is restacking
Here’s the simplest frame I’ve found for what changed: restacking. Europe’s strategic autonomy is increasingly built in three stacks:
Defence: not only procurement, but production capacity, supply-chain resilience, and innovation that scales under pressure.
Dual-use: the boundary between civilian and security capability becomes the organising logic of investment and controls.
Digital: cloud, compute, data governance, platforms, and standards determine what autonomy is even possible in the other stacks.
If you want the end-of-year punchline in one sentence: Europe is learning (again) that sovereignty is not a slogan; it’s a stack.
Stack 1: Defence stops being a “sector” and becomes an organising principle
In Brussels, the most telling shift this year wasn’t rhetorical urgency — it was the EU’s increasingly explicit push to treat defence as an industrial capacity problem.
You can see it in instruments like the Act in Support of Ammunition Production (ASAP), framed around identifying bottlenecks and ramping production across the supply chain. You can see it in the political momentum behind the European Defence Industry Programme (EDIP): a provisional agreement was announced in mid-October, with the Commission explicitly positioning EDIP as a bridge between short-term emergency tools (ASAP/EDIRPA) and longer-term industrial readiness. Reuters’ reporting on the subsequent Parliament vote captured the argument in miniature: “buy European” instincts versus flexibility to source from allies.
None of this magically resolves Europe’s defence-production constraints. But it does show something important: the EU is now acting as if scale is a coordination problem — across firms, finance, skills, permitting, and standards — not just a matter of budgets and procurement routines.
That’s a post-neoliberal state in action.
Stack 2: Dual-use becomes the operating system for economic security
Dual-use stopped being a niche term and became policy plumbing.
The clearest example is export controls. The Commission issued a recommendation in April aimed at improving coordination of national control lists. Then, in September, it adopted a delegated regulation updating the EU dual-use export control list (Annex I of Regulation (EU) 2021/821).
The direction of travel is towards more EU-level coherence in an area that historically leaned heavily on national discretion. That is visible not only in Commission communications but also in major reporting describing the Commission taking a stronger coordinating role to tighten controls and enforcement against Russia’s access to advanced technologies.
Dual-use also now sits alongside investment as a security channel. In December, Reuters reported a provisional EU deal to expand and harden foreign investment screening, including for military and dual-use equipment and “hyper-critical” technologies such as AI, quantum and semiconductors.
This is the defining tension Europe will have to manage: how to restrict strategically without strangling the spillovers that make innovation ecosystems productive. Too restrictive, and you drive capability elsewhere. Too permissive, and you subsidise dependencies and vulnerabilities.
2025 didn’t resolve that tension. It institutionalised it.
Stack 3: Digital is the base layer — and the most politically fraught
If defence is the headline stack, digital is the load-bearing one.
The Commission’s State of the Digital Decade 2025 report is blunt about progress and gaps: the EU has made advances, but remains off-track on multiple foundational technology targets.
Meanwhile, cloud governance has become a proxy battleground for what “sovereignty” actually means. The EUCS (European cybersecurity certification scheme for cloud services) debate shows how quickly “technical” questions become political — with arguments about standards, market fragmentation, and strategic dependence colliding.
What makes the digital stack uniquely hard is that Europe is not starting from a blank slate. Global cloud infrastructure is dominated by a small number of hyperscalers — and the broader cloud market is growing rapidly, powered increasingly by AI workloads. Europe’s challenge is to build credible options (and rules) without cutting itself off from the productivity gains of scale platforms.
That’s the post-neoliberal state dilemma in its purest form: govern dependence without pretending you can wish it away.
Why 2025 felt like a hinge year
The EU has been talking about strategic autonomy for years. What made 2025 different was the felt acceleration of uncertainty: war as a long-run condition on the continent; tighter economic coercion games; and a growing sense that allies cannot outsource “resilience” to someone else’s political cycle.
At the end of the year, new Commission plans emerged to boost resilience against economic threats such as rare earth shortages and to strengthen EU economic security tooling. Put that alongside defence industrial policy, dual-use controls, and investment screening, and the pattern is hard to ignore.
Dependence became legible. Once it’s legible, policy can reorganise around it.
2026: capability, not announcements
The stacks are easy to announce. The hard part is building — and routinely deploying — the dynamic capabilities that let public organisations adapt as the strategic environment shifts. Specifically, that means:
Sense-making: seeing the system clearly enough to set priorities and sequence action.
Connecting: coordinating across institutions so autonomy isn’t everyone’s separate pet project.
Seizing: turning intent into delivery through decisions, investment, and mission-oriented procurement that buys outcomes.
Shaping: reconfiguring resources — people, processes, finance — to build durable capacity over time.
Learning: running feedback loops that improve performance, not just communications.
These are the operational muscles of the post-neoliberal state — and in 2026, Europe will be judged on whether they’re real.
Three bottlenecks will define whether Europe makes the restack real:
Defence meets scale: production depends on coordination beyond legacy procurement routines.
Dual-use trade-offs sharpen: security restrictions collide with openness and spillovers.
Digital determines the ceiling: compute, cloud and platform governance either enable autonomy — or make it performative.
The opportunity is to frame autonomy as a democratic capability project: rebuilding institutions that can shape markets towards security, resilience, and shared prosperity.
The risk is a patchwork of national fixes that fragments innovation, raises costs, and erodes legitimacy — a Europe that spends more to achieve less.