‘Budapest Declaration’ signed as Orban hosts EU summit

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European leaders committed to developing a defence industry base and enhancing EU competitiveness at an informal European Council summit in the Hungarian capital last week.

Summit at pivotal moment for US, EU politics

The two days of meetings in Budapest came the same week as Donald Trump’s victory in the US election, the possible impending collapse of Olaf Schoz’s coalition in Germany, and reports of 10,000 North Korean troops arriving in Ukraine.

A total of 42 heads of state and government gathered to address the security and economic challenges facing the EU, including Russia’s ongoing aggression in Ukraine, escalating tensions in the Middle East, and EU-US relations following the recent US elections.

European Council President Charles Michel highlighted topics such as the EU’s economic and security challenges, and the importance of unified action to protect European values amid ongoing conflicts. Preserving the EU’s influence requires a combination of “unity and trust”, as the “magic ingredient”, Michel said.

On the sidelines of the summit, European leaders including Polish Prime Minister Donald Tusk met with Moldovan President Maia Sandu to reaffirm support for Moldova’s European trajectory, and discussed potential economic and reform-based cooperation to bolster the country’s alignment with European standards.

History is accelerating – Orban

Hungarian Prime Minister Viktor Orban – hosting the summit that had been downgraded by the EU in response to his rogue diplomacy in the first week as rotating EU president – called to “make Europe great again” in response to recent developments in the US, where president-elect Trump’s leadership heralds potential shifts in US-EU relations. 

Orban, considered Trump’s biggest ally in the EU, said the US election result could mark a turning point in the war, potentially signaling a shift in approach to the conflict. “History is accelerating with the US elections,” Orban stated, predicting rapid changes ahead, adding that the summit disproved claims of Hungary’s political isolation in the EU.

Ukrainian President Volodymyr Zelenskyy urged Trump to maintain a strong stance against Russia and noted that North Korean troops, reportedly supporting Russia in Ukraine, are now on European soil. He insisted that peace in Ukraine would require unified strength from Europe and the US, rejecting any concessions to Russia.

Concerns over tariffs on European exports

Trump’s previous threats to impose a 10% tariff on European exports have reignited trade concerns among EU leaders. European Commission President Ursula von der Leyen stressed the need to preserve strong transatlantic economic ties, cautioning that tariffs would be detrimental to both the US and European economies. Irish Taoiseach Simon Harris said Trump’s business-minded approach means he will understand that tariffs could jeopardise jobs on both sides of the Atlantic.

As the EU braces for Trump’s potential policy shifts, European leaders remain committed to shaping a narrative of continued collaboration, hoping to safeguard both economic stability and security in the face of geopolitical uncertainties.

On the security front, new NATO Secretary General Mark Rutte acknowledged Trump’s influence in raising NATO defence spending during his first term, but stressed the importance of continued US support for Ukraine.

Von der Leyen stressed that health care and education should be available to all, regardless of socioeconomic status and pledged to push for reforms that would enhance productivity and innovation, addressing the slow growth flagged in Draghi’s report. Her upcoming proposals, planned for the first 100 days of the new EC term, include a “clean industrial deal” to support decarbonisation and cutting red tape.

European leaders also expressed strong support for Ukraine. Orban said while Hungary, as Russia’s closest ally in the EU, advocates for peace, he respects Ukraine’s determination in its ongoing struggle. Michel and von der Leyen echoed this sentiment.

The summit concluded with EU leaders affirming plans to focus on economic reforms, competitiveness, and a unified stance on security, including continued support for Ukraine. 

EU unveils ‘Budapest Declaration‘

The EU leaders also discussed economics, guided by recent reports from erstwhile EU leaders Mario Draghi and Enrico Letta. The discussions underscored the need to improve productivity, bolster the single market by furthering the Capital Markets Union, and strengthen the EU’s competitiveness and resilience in the face of shifting global dynamics.

Draghi, who presented his report to EU leaders in Budapest, said the “sense of urgency today is greater”, after Trump’s election victory. “We have postponed too many important decisions in order to find consensus. That consensus did not come, and as a result we have suffered lower economic growth, and now stagnation,” he said, adding that the EU’s priority should be “a true single capital market” to promote investment and saving across all member states.

The four-page “Budapest Declaration” backs deregulation and boosting strategic sectors such as defence, biotech and artificial intelligence. On Friday, 8 November, the European Council wrote in a statement about the declaration that “Today, we stress the pressing need for decisive action to meet these challenges and call for determined and collective efforts”, and laid out the details of the Budapest Declaration:

1. Intensifying our efforts to ensure a fully functioning Single Market and unlock its full potential as a key driver for innovation, investment, convergence, growth, connectivity and economic resilience. To this end, we invite the Commission to present, by June 2025, a new and comprehensive horizontal strategy on the deepening of the Single Market, including a roadmap with clear timelines and milestones.

2. Taking decisive steps towards a Savings and Investments Union by 2026, and making urgent progress on the Capital Markets Union. This will create truly integrated European capital markets which are accessible to all citizens and businesses, in particular to SMEs and start-ups. This should allow our innovative companies to scale up. Furthermore, greater equity investment would contribute to securing EU competitiveness in critical technologies. Further progress is also needed to complete the Banking Union.

3. Ensuring our industrial renewal and decarbonisation, and allowing the EU to remain an industrial and technological powerhouse. To this end, we will develop a European industrial policy to ensure the growth of tomorrow’s key technologies, while paying particular attention to traditional industries in transition. We invite the Commission to present, as a priority, a comprehensive industrial strategy for competitive industries and quality jobs.

4. Launching a simplification revolution, ensuring a clear, simple and smart regulatory framework for businesses and drastically reducing administrative, regulatory and reporting burdens, in particular for SMEs. We must adopt an enabling mindset based on trust, allowing business to flourish without excessive regulation. Key objectives to be implemented by the Commission without delay include making concrete proposals on reducing reporting requirements by at least 25 % in the first half of 2025, and including red-tape and competitiveness impact assessments in its proposals.

5. Increasing our defence readiness and capabilities, in particular by strengthening our defence technological and industrial base accordingly[1]. In this respect, the High Representative and the Commission will present without delay developed options for public and private funding. We will also harness the potential of the space industry.

6. Putting Europe at the forefront of research and innovation globally, especially in disruptive technologies, and delivering on the objective of meeting the 3 % GDP expenditure target on R&D by 2030. We are ready to work on Enrico Letta’s proposal of a ‘fifth freedom’ to enhance research, innovation and education in the Single Market.

7. Pursuing the dual objective of strategic energy sovereignty and climate neutrality by 2050. To this end, we will build a genuine Energy Union characterised by a fully integrated and interconnected energy market as a matter of priority, through the decarbonisation of our energy mix and the supply of affordable and clean energy to all our citizens and businesses. Urgent measures will be taken to address the situation resulting from high and volatile electricity prices in Europe and their causes.

8. Building a more circular and resource-efficient economy and developing an integrated market for secondary materials,especially for critical raw materials. To this end, we invite the Commission to present its Circular Economy Act.

9. Strengthening the EU’s technological capabilities, accelerating the digital transformation across industries, seizing the opportunities of the data economy while ensuring privacy and security, as well as fostering the development of innovative technologies. We invite the Commission to make proposals in this regard by June 2025.

10. Harnessing Europe’s talent and investing in skills to foster high-quality jobs throughout the Union. We will aim to strengthen social dialogue, uphold equal opportunities and reduce inequalities, in line with the European Pillar of Social Rights.

11. Pursuing an ambitious, robust, open and sustainable trade policy, with the WTO at its core, which defends and promotes the EU’s interests, economic diversification and resilience. We will enhance our economic security while upholding an open economy and building international partnerships.

12. Delivering a competitive, sustainable and resilient agricultural sector, providing a stable and predictable framework for farmers, strengthening their position in the food supply chain, and ensuring fair competition globally and in the internal market.”