Reconfiguring Europe in a fractured global economy: The Florence Report in World Economy News 07/05/2026 The dramatic developments unfolding globally, spanning wars, geopolitical shifts, and trade disruptions, have caught Europe off balance. The 2026 Florence Report urges the EU to replace its broken ‘reduced responsibility model’ with a New European Social Contract integrating defence, finance, and the supply of public goods. In this column, the editors of the report argue that this shift would reclaim European agency by compensating the EU’s lack of external support and building mutual trust rooted in insurance-based solidarity. There is little doubt that the international order is at a point of rupture (Gensler et al. 2025, Obstfeld 2025, Papakonstantinou and Pisani 2024). The dramatic developments unfolding globally, spanning wars, geopolitical shifts, and trade disruptions, have caught Europe – both the EU and its member states – off balance. Where the current evolution will eventually settle is as yet uncertain. It is already clear, however, this upheaval has dismantled the external governance and institutional framework that underpinned the EU’s policy agenda, institutional design, and economic development, leaving what we have termed Europe’s ‘reduced responsibility model’ (RRM) entirely dysfunctional. The Florence Report (Buti et al. 2026) – the flagship initiative of the EMU Lab at the Robert Schuman Centre for Advanced Studies at the European University Institute – explores how Europe can navigate this fundamentally changed world order. It discusses the roots and dimensions of fragmentation and examines how these developments constrain policy space for action at both the national and the EU governance levels. Pursuing a pragmatic way forward, the report re-examines established governance frameworks to articulate a coherent policy agenda to get over the RRM towards a more independent and secure Europe. The end of the reduced responsibility model For decades, the EU operated under a ‘reduced responsibility model’ – member states could under-invest in common defence by relying on US protection, count on the vast American market to pursue export-led growth strategies, and anchor financial stability to US-led hegemonic governance of international law and trade institutions. To be clear, European integration was first and foremost led by strong internal political drivers, but the international context at the time allowed member states to progress with the Union project by bypassing ‘full responsibility’ in key areas. United Europe’s remarkable achievements all suffered from the same ‘hold-back’ diagnosis. Europe embraced the Single Market project, but never completed a common strategy to secure the efficiency and resilience of own infrastructure, telecommunication, or energy networks. It launched the euro, pretending that the unmatched independence of the ECB, the Stability and Growth Pact, and the no bail-out clause would guarantee a resilient financial and macroeconomic framework to deliver on the promise of shared prosperity. Fractured by open geopolitical rivalry and strategic competition, the global environment is no longer conducive to the EU’s reduced responsibility model. Neutral commons such as energy, finance, and climate have been explicitly weaponised, turning public goods into public bads. What the EU counted on as pillars of cooperation and stability are now being used against it. Although we are still in uncharted wa