Europe faces 'galloping populism,' Juncker warns in State of the Union address

The European Union (EU) lacks unity and faces the danger of an unprecedented rise of "galloping populism," the head of the European Commission said on Wednesday.

Delivering his annual "State of the Union" address, Commission President Jean-Claude Juncker said that there was still "a lack of union" in the EU and that "this has something to do with the crisis in the EU."

"There are too many areas where the scope in which we cooperate together is too small and national interests are brought to the fore. European integration cannot be left or bow to the interests of individual members states," he said.

Juncker said that the EU did not want to undermine national states but wanted a "better Europe" and "more solidarity."

"There are splits out there and fragmentation exits...and that is leaving scope for galloping populism – and that does not solve problems, it creates them and we need to be aware of that and protect ourselves against it," he warned.

"It's high time we take a clear look at the situation, unemployment continues to be too high in Europe and social injustice continues and that's why we have to very quickly get to work on the basis of social fairness and equity," he said.


European Commission President Jean-Claude Juncker
Ints Kalnins | Reuters
European Commission President Jean-Claude Juncker

Juncker also proposed that the region double the duration and financial capacity of its European Investment Fund which, he said, would provide a total "of at least 500 billion euros ($561 billion) of investment by 2020, and will work to reach 630 billion by 2022."

The European Union (EU) has a lot to worry about: The U.K.'s decision in June to leave the economic and political bloc, rising anti-EU sentiment elsewhere, the migrant crisis and potential political upheavals in some of the region's biggest economies.

Mentioning the U.K.'s decision to leave the EU, Juncker said again that the decision was regrettable but that the EU itself was not at risk. He again called on the U.K. to not delay in acting on the June referendum result.

Political risks

Juncker's speech comes against a backdrop of political and economic risks facing the continent. Italy is holding a referendum on constitutional reform next month, which, if lost, could see the prime minister step down, and elections in France and Germany next year could see the "old guard" in politics shaken by Euroskeptic parties.

In the meantime, Spain still does not have a government and could be heading towards its third election in 12 months. Elsewhere in the euro zone, Greece is a particular worry as it struggles to meet the conditions of its third bailout program.

Meanwhile in eastern Europe, governments have become increasingly vocal in their opposition to the EU's migrant policy and proposals that each country should take a quota of migrants to help share the burden of hundreds of thousands of people from war-torn countries in the Middle East and Africa.

In addition, Europe's relationship with Russia (and whether to extend economic sanctions on its neighbor when they expire next year), Turkey (with whom it has a fragile migrant deal) and the rest of the world also hang in the balance.

In Juncker's address on Wednesday, he said that the EU also needed to protect its industries and workers, tackle tax evasion and promote investment. He said that terrorism was also a threat and that a "collective approach" was needed to tackle it. "We need to show terrorists that they have no chance when they try to attack (European) values."

Anti-EU feeling

There is a distinct worry in the corridors of Brussels and Strasbourg, where the EU's major institutions are based, that anti-EU sentiment is rising and that the entire project and union of 28 (and soon to be 27 after Brexit) countries could be disintegrating.

Carsten Nickel, deputy director of research at Teneo Intelligence, said in a note Tuesday that "the track record of turning the speech into political action is poor" and there was no reason to believe this speech would be any different.

"Against the backdrop of growing political fragmentation, a busy electoral calendar in 2017, and distrust for Juncker in key capitals such as Berlin, there is no reason to assume that this time will be different. In reality, it will be a major victory for the European project if in the coming months, leaders like Chancellor Angela Merkel are able to fight off East European demands for the outright repatriation of EU powers."

"Beyond the 2017 election cycle, the room for institutional build-out will remain limited given the by-then likely consolidated power base for Eurosceptic forces in many member states," he added.

Follow CNBC International on Twitter and Facebook.