On 21 April 2026, the Economic and Monetary Union Laboratory (EMU Lab) at the EUI’s Robert Schuman Centre launched the 2026 Florence Report, Reconfiguring Europe in a fractured global economy, a collective research effort aimed at rethinking Europe’s role and resilience in a rapidly changing global context.
This Report comes at a time when recent global developments point to a serious break in international order, leaving the European Union and its member states in a more uncertain and fast-changing environment than before. In particular, the international environment that historically structured European development has effectively disappeared, rendering the current ‘reduced responsibility model’, as described in the report, no longer functional.
In this interview, the report’s editors Marco Buti, Giancarlo Corsetti, and Anna Peychev, reflect on the current geopolitical and economic landscape and outline the steps required to move from this model towards a more integrated and cohesive approach capable of addressing the challenges of a more fragmented world.
Featuring 30 original contributions, the report also highlights the importance of interdisciplinary research in shaping and informing effective policy responses.
The Florence Report refers to an EU ‘reduced responsibility model’ in foreign and security policy over recent decades. Could you please tell us what this model is and how it is evolving in response to recent developments such as wars, geopolitical shifts, and trade disruptions?
Marco Buti: So far, Europe has had it easy: It could count on a benign external environment in terms of trade, security, politics — the general global order — to support its own progress. This was especially the case with the success of the euro and the Single Market. This resulted in the EU exhibiting signs of ‘small country syndrome’ with its growth relying on, mostly, the US consumer of last resort to absorb its exports. Relying on an export economic model is fine for a small open economy, but not for a large one, because it creates external vulnerabilities while subtracting demand from the global economy. Also, on matters of financial stability, the European Central Bank (ECB) got to focus on domestic matters, since the US Fed was providing the safe asset and financial leadership for global markets. This, however, slowed the development of the ECB and with that, the potential reach of the euro. Then, there is the matter of defence, which has become unfortunately obvious of late: The ‘peace dividend’ after the fall of the Berlin Wall resulted in massive underinvestment in European security. In simple terms, the Reduced Responsibility Model means that Europe did not have to follow through on completing its most important integration projects, but they somehow — externally supported — got on anyways. The world order, which made this possible is now gone and it will not come back, even after Trump. What is more, the rulebook, which we depended on for our prosperity is now being used against us. The EU and member states, as a whole, must realise what is happening, identify the implications, and respond appropriately. The Florence Report provides guidance to make sense of the new world and advice on adjustments.
What steps does the report propose for the EU’s transition away from this approach, and how would this reshape its role as a global actor?
Marco Buti: A key message of the report is that the domestic and the global agendas of the EU cannot be looked at in isolation, as has often been the case in the past. These are inextricably linked and credible action depends on sequencing. To strengthen itself both domestically and internationally, the EU must first act at home by undertaking credible policy and institutional reforms — specifically, the supply of European public goods (including security and defence) and building the Savings and Investment Union — that would in turn allow it to play a leadership role in stabilising the global order with likeminded countries. This is the Florence Report’s three-pronged policy agenda, aimed at creating a New European Social Contract to replace the now-dysfunctional Reduced Responsibility Model. In the footsteps of the late Jürgen Habermas, we propose the concept of insurance-based solidarity as a fundamental building block of a this contract: In the face of increasing global risks — including the climate catastrophe or sudden financial shocks — governments should realise the long term economic benefits of mutual insurance in the knowledge uncertainty, rather than going it alone in a wishful oblivion of certainty. Rebuilding trust and reducing the political discount rate for politicians will be key in enshrining all this in a new European Social Contract.
The end of this model also raises questions about the balance of power between EU institutions and member states. How can Europe avoid falling into a fragmentation trap?
Giancarlo Corsetti: To thrive in a weaponised global economy, Europe will have to escape the fragmentation trap: All would benefit from cooperation, but sharing sovereignty implies a short-term cost that national politicians are not ready to pay. The illusion of an immediate gain from going alone often prevails over collective decisions that would benefit everyone in the longer term.
Overall, however daunting the circumstances, the report has a message of hope. It rejects the idea of a powerless Europe destined to economic decline, erosion of social standards, and eventual marginalisation on the world stage. Importantly, Europe can boost its prospects by remaining true to its fundamentals: democratic values, rule of law, and regulated markets. Our rules-based system is an increasingly scarce commodity that must be leveraged. Europe doesn’t have to give in to the catch-up obsession vis-à-vis the US and China. Instead, it should devise its own original technological trajectories which combine efficiency, equity, and sustainability. There are examples, especially from the Nordic countries, of how this can be done successfully.
We also look at our social system as an asset: It not only protects our citizens, but incentivises risk taking and innovation. By offering a large but regulated market, Europe can also avoid the excesses of the US system where very powerful and concentrated economic interests result in political capture and undermine the democratic foundations of the country. All this will require tough choices, but the rewards could be massive. We’re comforted by the fact that citizens’ support for Europe is at historically high levels, and even so in traditionally eurosceptic countries. One could conclude that we’ve ‘made’ Europeans, now we have to (re)make Europe.
Involving 40 contributors over two years of research, the report stands as a notable example of interdisciplinary and integrated research. How does this approach translate into policy-relevant insights or recommendations?
Anna Peychev: We have been incredibly lucky to have the support of over 40 wonderful authors from multiple disciplines — economists, lawyers, political scientists, historians, in the true spirit of the EUI — and across different professional fields as well: academics, policymakers, practitioners. The work they produced for the Florence Report — and through their continuous engagement with the EMU Lab over the past two years — has been truly outstanding. In this context, translating research into policy insights and recommendations has occurred rather naturally, as a product of this group’s interactions. Now, to be sure, the Florence Report is not a simple to-do list of how to ‘fix’ Europe. Perhaps it is better described as a map to orient stakeholders — citizens and policymakers alike — on where we are at and where we ought to be going.
The Florence Report is the flagship initiative of the Economic and Monetary Union Laboratory (EMU Lab) at the EUI’s Robert Schuman Centre for Advanced Studies. Launched in 2024, the Lab is a joint initiative of the Pierre Werner Chair and the Tommaso Padoa-Schioppa Chair with the core objective of contributing analyses and policy proposals to the debate on Economic and Monetary Union. In creating a multidisciplinary workspace, the Lab has fostered synergies among policy experts, practitioners, and academia.
Marco Buti holds the Tommaso Padoa Schioppa Chair at the Robert Schuman Centre. His work focuses on the Economic and Monetary Union, the political economy of European integration, fiscal policies and policy mix, unemployment and welfare state reforms, the EU budget, and global economic governance.
Giancarlo Corsetti holds the Pierre Werner Chair at the Robert Schuman Centre and is Professor at the EUI Department of Economics. His contributions range from models of the international economy and open macro models; to empirical and theoretical work on currency, financial and sovereign crises; monetary and fiscal policy; and international finance.
Anna Peychev is a Research Fellow at the Robert Schuman Centre. Her current research is focused on the legal issues surrounding the European Economic and Monetary Union, with particular attention to the European Central Bank and European Stability Mechanism.