A “core” group of European countries should work with allies to boost innovation and collectively counter the growing dominance of the US and China, a Nobel Prize-winning economist has said.

Philippe Aghion argued that willing EU countries should deepen economic and research ties with like-minded partners, such as Canada, to help shape a geopolitical order increasingly being driven by Washington and Beijing.

“We should have a core set of countries, including Canada and possibly Singapore and others… who embrace common values,” said Aghion, who won the 2025 Nobel Prize for his work on innovation and economic growth.

“And then the core can decide to make deals with the US, with China, with others,” Aghion added. “But we [the EU] are the centre.”

His remarks echo calls by Canadian Prime Minister Mark Carney for “middle powers” to cooperate more closely amid intensifying great-power competition. They also reflect growing concern in Europe over China’s industrial dominance and the bloc’s dependence on an increasingly unpredictable US.

The comments also come as Brussels seeks deeper trade and economic ties with partners including India, Australia and the Mercosur bloc.

Aghion, a close ally of France’s President Emmanuel Macron, also reiterated the French leader’s proposal for a select group of EU countries to deepen market integration if agreement among all 27 member states proves impossible.

“If all 27 countries are willing to play the game, [that’s] for the better,” he told journalists on the sidelines of last week’s Brussels Economic Forum. “But you cannot wait until everybody is on board.”

However, Aghion rejected the suggestion that endorsing such a coalition was tantamount to backing a ‘two-speed Europe’, an idea sporadically supported by European Commission President Ursula von der Leyen.

“Those who want to move faster should be able to move faster,” he said.

Reasons for hope

Aghion also argued that recent political shifts – including former Hungarian Prime Minister Viktor Orbán’s electoral defeat – could accelerate EU efforts to deepen economic coordination and strengthen the bloc’s strategic autonomy.

Orbán had long frustrated EU decision-making, particularly on Russia and Ukraine. His successor, Péter Magyar, has pledged to rebuild ties with Brussels.

“I’m very hopeful [about] the change in Hungary, because with Orbán, you could not do business,” Aghion said. “I hope with Magyar you can do business.”

However, he warned EU capitals against trying to play Washington off against Brussels – as Orbán repeatedly did during his many years in power – arguing member states should not “play a double game”.

Aghion also suggested the Middle East conflict and resulting energy turmoil could ultimately accelerate Europe’s shift towards renewables and reduce external dependencies. “My hope is that the crisis will be another wake-up call,” he said.

Europe’s strong research base and general attractiveness as a place to live are additional reasons for optimism, Aghion added.

“We can do it, because we have very good scientists,” he said. “We know that we can attract many more researchers and inventors. So it’s incumbent on us to get our act together.”

Problems remain

However, Aghion warned that major structural obstacles still prevent Europe from becoming a global innovation hub.

Among them, he said, is Europe’s deep aversion to industrial policy, at a time when both the US and China are investing heavily in strategic sectors.

Brussels has focused “too much on carbon tax and not enough on green industrial policy”, Aghion said. “In the name of competition policy, we precluded industrial policy.”

He also blamed parts of the EU’s regulatory framework for the bloc’s weak performance in growth and innovation.

The EU’s rules are “not designed to boost innovation” but rather “to help us avoid fighting each other”, he said. “Now we have to rely on ourselves, and we need to innovate. Because if we don’t innovate, it will be China and the US making the calls.”

(cs, cm)