Europe E3 re-emerges as economic and political powerhouse

Business Times

15-07-2025

GERMAN Chancellor Friedrich Merz makes his first official visit to the United Kingdom on Thursday (Jul 17) to sign a landmark bilateral friendship deal. The agreement confirms not only warmer economic and political ties between London and Berlin, but also the post-Brexit re-emergence of the longstanding, so-called E3 group which includes France too.
For much of the period since the UK's 2016 referendum on its European Union membership, relations between these top three European economies have been chilly. The ardently pro-Brussels French President Emmanuel Macron and his various German counterparts, including former chancellor Angela Merkel, still believe Brexit to be an act of political vandalism to the continent.
So much so in fact that Poland, the largest economy in Central and Eastern Europe, has increasingly been perceived as a challenger for the third slot in Europe's post-Brexit E3 group. This Paris-Berlin-Warsaw trilateral relationship is sometimes called the Weimar Triangle.
However, since the Ukraine war began, this German-French-Polish axis has had less prominence, important as it remains. The reasons behind this include Poland's cultivation of its economic and political relationship with the United States following Russia's invasion of Ukraine.
So in the period since the pandemic – which saw the Ukraine conflict and Donald Trump become the US president for the second time – there has been a growing realisation in France and Germany of the need to collaborate more with the UK, and vice versa. This has seen the three G7 and G20 nations re-emerge as a triumvirate of regional powers, including in their quest to build Europe's relationship with Trump.
This rejuvenated E3 dynamic has been evident on several high-profile platforms, including when then US president Joe Biden visited Berlin on Oct 18 last year. The European leaders he met for a quadrilateral meeting during his stay were UK Prime Minister Keir Starmer, Macron and then German chancellor Olaf Scholz.
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The warmer ties between London and Berlin will be deepened on Thursday in a treaty that will cover defence, economic growth, and wider issues. It will reportedly include a mutual assistance clause specifying that a threat to one nation would be regarded as a threat to the other.
This week's UK-German deal is key as it helps cement the E3 trilateral alliance. France is already linked to Germany via the Aachen Treaty and to the UK via the Lancaster House Treaty.
The relationship between Starmer and Merz could be especially key for European and wider international relations in the coming years. Both are potentially key reformers whose periods in office may overlap with the next UK election probably in 2028 or 2029, and the next Germany ballot expected in 2029.
At the same time as there are warming ties between Berlin and London, the relationship between Paris and London, as well as between Paris and Berlin, is warming up too. Of course, the Franco-German alliance has long been the motor of European integration in the post-World War II era and Macron enjoyed a generally positive relationship with Merkel, which allowed them to achieve much together on the international stage.
However, cooperation between the two powers ebbs and flows depending upon the personalities of the office holders in Berlin and Paris. Merz's predecessor as chancellor, Scholz, and Macron, had an uneven relationship, but this may be changing in a positive direction under Merz.
Meanwhile, warmer Franco-UK ties were showcased again last week with Macron making his first ever UK state visit, to London and Windsor Castle. The last such state trip by a French president to the UK was by Nicolas Sarkozy almost two decades ago in 2008.
Whereas much of the UK-German bilateral relationship has centred on economics, security is key to UK-French ties as both are nuclear states with UN Security Council permanent membership, unlike other European partners. The Lancaster House deal between the two powers opened a window to jointly update nuclear arsenals which is as yet unfulfilled, and there is potential for broader military coordination.
Positive as the re-emergence of the UK-French-German E3 relationship is for Europe, the ties will continue to have challenges in the post-Brexit era. This is especially so between the UK and France, and the UK and Germany.
Take the example of the ties between Paris and London. Macron had one of the hardest stances on the UK's exit from the EU in the period from 2016.
This reflects the complex, contradictory relationship that Paris has long had with London in the context of European affairs.
Macron's Brexit positioning, including his robust stance on precluding future UK economic access to the single market, was reinforced by broader French plans to pitch Paris as a competing financial centre to London which began in earnest under the presidency of Francois Hollande. This saw former finance minister Michel Sapin and Hollande's Brexit special envoy Christian Noyer – a former Bank of France governor – openly promoting Paris with key financial firms.
This has continued under Macron as he hailed the decision to relocate the European Banking Authority (EBA) to Paris from London as a 'recognition of France's attractiveness and European commitment'. French officials hope that the EBA's relocation will help bring still more UK banking jobs to France's capital city.
What France's position on Brexit underlines is how each EU state has distinctive political, economic and social interests that have informed their stance on the UK's exit.
Thus, while the EU-27 were, in general, remarkably unified in their negotiations with London, the positions of the individual countries varied according to factors such as trade and wider economic ties and patterns of migration with the UK, domestic election pressures, and levels of eurosceptic support within their populaces.
While the position of Paris has now moderated, the two nations remain misaligned in some key areas, including fishing rights. Another example is migration, where Starmer is under growing pressure to stop people illegally crossing the English Channel from France.
Last week, Starmer and Macron agreed a new 'one in, one out' returns scheme which would see the UK deporting to France undocumented people arriving in small boats, in return for accepting an equal number of legitimate asylum seekers with UK family connections. However, only time will tell how successful this will be in halting illegal migrants making so-called small boat crossings.
Taken together, all of these developments underline that the E3's re-emergence has significant potential to increase collaboration further between Europe's leading three economies. However, the distinctive post-Brexit interests of each state will continue to cause tensions from time to time, which will remain a barrier to the full resetting of the trilateral relations.
The writer is an associate at LSE IDEAS at the London School of Economics