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More than a year after the election that handed Donald Trump a decisive return victory, the Democratic party has yet to released its postmortem analysis. However, last week, an influential liberal advocacy organization released its own. The Harris campaign, its authors contended, failed to connect with core constituencies because it did not focus enough on tackling everyday financial worries. In focusing on the menace to democracy that Trumpist populism represented, liberals overlooked the kitchen-table concerns that were foremost in many people’s minds.

A Lesson for European Capitals

While Europe prepares for a tumultuous period of politics between now and the end of the decade, that is a lesson that needs to be fully understood in European capitals. The White House, as its newly released national security strategy indicates, is optimistic that “nationalist movements in Europe will quickly replicate Mr Trump’s success. In the EU’s core nations, Marine Le Pen’s National Rally (RN) and Alternative für Deutschland (AfD) lead the polls, supported by significant segments of working-class voters. Yet among mainstream leaders and parties, it is difficult to see a response that is adequate to troubling times.

Era-Defining Challenges and Expensive Solutions

The issues Europe faces are costly and era-defining. They include the war in Ukraine, maintaining the momentum of the green transition, addressing demographic change and building economies that are more resilient to pressure by Mr Trump and China. As per a European research institute, the new age of global instability could require an additional €250bn in annual EU defence spending. A significant study last year on European economic competitiveness called for substantial investment in public goods, to be partly funded by jointly held EU debt.

Such a economic transformation would stimulate growth figures that have stagnated for years.

But, at both the EU-wide and national levels, there remains a lack of boldness when it comes to generating funds. The EU’s so-called “frugal” nations oppose the idea of collective borrowing, and Brussels’ budget proposals for the next seven years are profoundly timid. In France, the idea of a wealth tax is widely supported with voters. Yet the beleaguered centrist government – while desperate to cut its budget deficit – will not consider such a move.

The Price of Inaction

The reality is that in the absence of such measures, the less affluent will pay the price of fiscal tightening through austerity budgets and increased inequality. Bitter recent conflicts over retirement reforms in both France and Germany highlight a growing battle over the future of the European welfare state – a phenomenon that the RN and the AfD have eagerly leveraged to promote a politics of nativist social policy. Ms Le Pen’s party, for example, has resisted moves to raise the retirement age and has said that it would focus any benefit cuts at non-French nationals.

Avoiding a Strategic Advantage for Populists

Across the Atlantic, Mr Trump’s pledges to protect blue‑collar interests were deeply disingenuous, as later Medicaid cuts and tax breaks for the wealthy demonstrated. But in the absence of a convincing progressive counteroffer from the Harris campaign, they proved effective on the campaign trail. Without a fundamental change in economic approach, social contracts across the continent risk being ripped up. Governments must steer clear of giving this political gift to the populist movements already on the rise in Europe.