Geopolitical change will be a key factor in determining the policy hierarchy.

For a long time, the combination of an omnipresent monetary policy and an accompanying budgetary policy allowed the period of great moderation characterized by a low volatility evolution of growth and inflation.
The climate and the necessary energy transition were introduced in homeopathic doses so as not to disrupt the existing macroeconomic framework. Moreover, climate requirements did not then change behavior. The trajectory of emissions slowed down a little, but that of global temperatures broke records year after year, up to 1.6°C above the pre-industrial average in 2024.

By provoking tensions between the United States and China, technology has shaken up this macroeconomic framework. Technology, a vector for the deployment of globalization via significant transfers, has then become a weapon, quickly rising in the concerns of governments. The American Inflation Reduction Act took this into account by reinstating the industrial policy associated with technology while making it compatible with the climate.

The coherence of economic policy has been shattered with Trump’s arrival in the White House.

First of all, AI, presented as the transcendence of technology, is favored by Washington while the climate is no longer an objective. To remain competitive, the Europeans have altered their intransigence on the climate. As was specified in the omnibus, the objectives remain but their achievement is significantly simplified. The hierarchy of policies has been disrupted for the first time. Competition through AI and technology prevails over the long-term constraint of the climate. In fact, companies are abandoning this major objective. BP is the latest.

Yet since the AI ​​summit, the world has become even more twisted. The United States has changed its position, moving closer to Russia to the detriment of the Europeans. Every European state is now considering increasing the share of defense in overall budgetary spending, with Brussels even considering not including it in budgetary measures. More planes, weapons, missiles and munitions will have to be built, military infrastructure upgraded to be ready…
With the emergence of politics, the hierarchy of economic policies is once again disrupted. Resources will have to be found to finance the military and sacrifice other expenses.
The resolution of the equation will be impossible. The military, industry and technology will prevail. The climate will remain a secondary objective and the social dimension of the adjustment could become major, reversing the priorities pursued since the post-war years.