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More than a year after the vote that delivered Donald Trump a decisive comeback victory, the Democratic Party has yet to released its election autopsy. However, recently, an influential liberal advocacy organization released its own. The Harris campaign, its authors argued, did not resonate with core constituencies because it failed to concentrate enough on tackling basic economic anxieties. In focusing on the menace to democracy that Trumpist populism represented, liberals neglected the bread-and-butter issues that were uppermost in many people’s minds.

A Warning for Europe

While Europe prepares for a turbulent era of politics between now and the end of the decade, that is a message 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 mirror Mr Trump’s success. Within Europe's Franco-German engine room, Marine Le Pen’s National Rally (RN) and Alternative für Deutschland (AfD) top the polls, backed by large swaths of working-class voters. Yet among establishment politicians and parties, it is difficult to see a response that is adequate to troubling times.

Major Challenges and Expensive Solutions

The challenges Europe faces are costly and era-defining. They encompass the war in Ukraine, maintaining the momentum of the green transition, addressing demographic change and building economies that are less vulnerable to bullying by Mr Trump and China. According to a European thinktank, the new age of geopolitical insecurity could necessitate an additional €250bn in annual EU defence spending. A major report last year on European economic competitiveness demanded substantial investment in shared infrastructure, to be partly funded by collective EU debt.

Such a fiscal paradigm shift would stimulate growth figures that have flatlined for years.

But, at both the pan-European and national levels, there continues to be a deficit of courage when it comes to revenue raising. The EU’s so-called “frugal” nations oppose the idea of collective borrowing, and EU spending plans for the next seven years are deeply unambitious. In France, the idea of a wealth tax is overwhelmingly popular with voters. But the beleaguered centrist government – while desperate to cut its budget deficit – will not consider such a move.

The Cost of Political Paralysis

The truth is that without such measures, the less affluent will pay the price of financial adjustment through austerity budgets and increased inequality. Acrimonious recent conflicts over retirement reforms in both France and Germany highlight a growing battle over the future of the European welfare state – a trend that the RN and the AfD have happily exploited to promote a politics of welfare chauvinism. Ms Le Pen’s party, for example, has opposed moves to raise the retirement age and has said that it would focus any benefit cuts at foreign residents.

Avoiding a Political Gift for Populists

Across the Atlantic, Mr Trump’s promises to protect blue‑collar interests were largely insincere, as subsequent healthcare reductions and tax breaks for the wealthy demonstrated. Yet in the absence of a compelling progressive alternative from the Harris campaign, they worked on the campaign trail. Absent a fundamental change in economic approach, social contracts across the continent are in danger of being ripped up. Governments must steer clear of handing this political gift to the populist movements already on the rise in Europe.