At Delphi Economic Forum X, in the quiet gravity of Leto Hall, the spotlight turned to Europe’s uncertain path forward. Christian Schubert of Frankfurter Allgemeine Zeitung sat down with Portugal’s Minister of State and Finance, Joaquim Miranda Sarmento, to dissect the EU’s current standing and project a pragmatic roadmap for the continent’s future.

Sarmento didn’t open with idealism or buzzwords. He opened with a reckoning. “Europe’s productivity has stagnated since 2008,” he stated flatly. While the United States and parts of Asia continued to grow and adapt, Europe, he argued, has remained encumbered by bureaucracy, overregulation, and fragmented energy and financial markets. The result? Sluggish growth, rising debt, and public frustration—conditions ripe for political polarisation.

Drawing from Portugal’s own recovery from a severe economic crisis, Sarmento championed structural reform. “We changed our labor market, real estate rules, public administration,” he said. These reforms, he insisted, are now paying off. Portugal, once reliant on an EU bailout, is enjoying moderate growth, low unemployment, and a reduction in public debt—95% of GDP and dropping.

A vision for reform: less red tape, more integration

For Sarmento, Europe’s future hinges on getting serious about internal reform. His priority list is blunt: reduce bureaucratic friction, improve labour skills, manage strategic migration, and finish what was started in the Capital Markets and Banking Union.

“Europe is overregulated,” he said. “Compared to the U.S., the burden of doing business here is far too high.”

But reform alone won’t shield Europe from rising geopolitical pressures. When Schubert brought up the Green Deal, Sarmento urged balance. “Yes, we need to decarbonise. But we can’t compromise energy security or ignore cost realities,” he cautioned. The EU’s energy policy, he argued, must be pragmatic—especially in the face of unpredictable global trade shifts and U.S. tariffs.

Strategic auutonomy in a divided world

On defence and trade, Sarmento’s tone hardened into strategic realism. “Europe must not become a victim in global power plays,” he said. Increasing defence spending to NATO’s 2% GDP benchmark is non-negotiable, but for Portugal, it is also necessary to maintain fiscal discipline. “We’ll increase defense spending, but not at the expense of our hard-won fiscal stability.”

Portugal, he explained, is positioning itself to specialise in naval and air force capacities—aligned with its geographical role as Europe’s Atlantic frontier.

When asked whether Europe should cosy up to China in response to potential U.S. isolationism, Sarmento was clear: “Europe should be the champion of fair and free trade—not a pawn in others’ economic strategies.” The solution, he said, lies in diversification and strength through unity. That means integrated energy markets, coordinated industrial policies, and smarter defence manufacturing.

The stakes of stagnation

Underlying all of Sarmento’s responses was a common thread: a fear that Europe, if it doesn’t act, will become increasingly irrelevant. “We must regain the trust of our citizens,” he said. “People turn to nationalism because their living standards haven’t improved. Europe needs to be seen again as a force for opportunity.”

His message was ultimately a call to courage. Not the kind found in grandstanding or protectionism, but in governance that balances short-term constraints with long-term vision. At a time when division threatens to outpace dialogue, Sarmento’s insistence on pragmatic integration offered a roadmap—and a challenge.

As the EU heads into another election cycle and global power structures realign, the question is no longer whether reform is necessary. It’s whether Europe still has the collective will to carry it out.