2025: The Year of Disruption

Donald Trump’s second term as US president is probably the single most important event happening in 2025 that will cause global disruption.
With full control of the Senate and the House and no re-election after his term ends, Trump will use his time in office to secure his legacy.
On two crucial fronts – the economy and security – Trump’s decisions, embodied in his America First policy, will have consequences for Europe and the world. Malta will be no exception.

Economist JP Fabri says Trump’s resurgence should serve as a wake-up call. "His America First rhetoric, coupled with a focus on economic self-sufficiency and innovation, exposes Europe’s vulnerabilities," he argues.

Fabri speaks of an EU that is cautious, overtly bureaucratic, and unable to adapt to a world shaped by technological breakthroughs. He says: "If Europe continues on its current trajectory, it risks irrelevance, side-lined in a global economy increasingly dominated by those willing to embrace disruption and reinvention."

Mario Draghi’s report on Europe’s competitiveness and Enrico Letta’s on the single market, published in 2024, provided an analysis of Europe’s persistent weaknesses.

EU weaknesses exposed

In 2025, with an isolationist Trump taking over the reins in America, these weaknesses are likely to be exacerbated.

Take, for instance, Trump’s threat of tariffs being imposed on European goods unless the EU imports more oil and gas from the US.
According to the US Census Bureau, the EU exported $576.3 billion worth of goods – nearly 20% of its total exports – to the US in 2023. This makes the US the bloc's second-largest trading partner, and one it cannot afford to lose.

In these circumstances, the EU can either seek appeasement or retaliate with similar tariffs on American goods. However, this game of high stakes exposes the EU’s high dependency on third countries for its energy needs. The Green Deal was supposed to be the EU’s answer to a cleaner, home-grown energy sector, but its implementation remains slow and cumbersome.

Draghi said a decarbonised energy system would “radically decrease import dependency” and, as a consequence, increase energy security and resilience. This drive, he argued, also offers an opportunity to address, at least in the medium term, one of the key problems for European industry – energy prices that are higher than those of the US and China.

However, Draghi noted that to capitalise on these opportunities, decarbonisation had to be coupled with competitiveness, requiring a more interconnected and flexible EU bureaucracy. Adopting a more carrot-based approach rather than relying solely on the stick may help the EU transition to greener pastures without putting its industries and families at a disadvantage, whilst also creating green jobs.

Europe’s security challenge

The Russian invasion of Ukraine in 2022 was a rude awakening for the EU in terms of its oil and gas dependency on Russia. Similarly, 2025 could bring about the realisation that Europe must also stand up on its own two feet for its defence and security needs because its friend across the Atlantic is not interested in playing his part.

An isolationist Trump will increasingly disengage from Europe and NATO, leaving the bloc to fend for itself at a time when war continues to rage in Ukraine and when hybrid attacks are on the rise. This will require more defence spending by EU member states and greater cooperation to undertake joint initiatives if the will to do so can be found.

Trump’s ‘plan’ for Ukraine still has to unfold, but it will likely be conditional on Ukraine having to cede territory to Russia in exchange for peace. Whether Ukraine will give in to such an indecent proposal remains to be seen, but pragmatism and the EU’s inability to prop up the Ukrainian war machine on its own will likely force its hand.

The outcome will be a victory for Vladimir Putin, who will be emboldened by the US’s disengagement policy. Russia will remain a threat to European security, whether this comes in the form of conventional warfare, GPS blocking, sabotage of undersea cables, or hacking.

Retired army officer Col. David Attard believes Trump’s presidency will significantly challenge European defence and security. "Without strong US backing for NATO’s deterrence measures or firm condemnation of Russian actions, countries in Eastern Europe might feel more vulnerable and isolated," he says.

Attard believes the EU will need a “more integrated and self-reliant” defence strategy, but getting there is another story altogether. "Europe is already way too late to achieve this, and a level of appeasement towards Trump is expected, thus weakening Europe further as a global actor," he adds.

And the timing of Trump’s ascendency to power could not be more problematic, considering that the EU’s two largest powerhouses – Germany and France – are facing internal political instability.

Stable Malta

These global headwinds could impact Malta as an EU member state with a very open economy. Although the Central Bank of Malta’s forecast earlier this month revised economic growth upwards to 3.9% in 2025, it noted that the downside risks largely emanate from possible adverse trade effects related to geopolitical tensions, higher US tariffs, and the possibility of retaliatory measures.

Nonetheless, Malta’s headline figures remain largely attractive, with the CBM forecasting annual inflation at 2.2%, unemployment at 3.2%, a deficit dropping to 3.5%, and a government debt ratio of 50.2% in 2025.

The debt level is such that it allows the Maltese government significant leeway to leverage the economy if global trade is disrupted by Trumpian tariffs or war.

The winds of change

On the energy front, Malta will continue to be dependent on fossil fuels, but the government will kick off the process of disrupting the traditional energy sector. In 2025, the process to invest in floating offshore wind farms will step up. The government will be expecting feedback from companies for the “design, construction, operation, maintenance, and decommissioning” of a floating wind farm situated 12 nautical miles away from shore. The government wants to produce around 300MW of energy from floating wind turbines and is willing to grant a 35-year concession in areas that lie within Malta’s Exclusive Economic Zone.

It will be some years before Malta gets its first wind turbines, but in 2025, the tender for the first battery energy storage units – at Delimara and Marsa – issued by Interconnect Malta, a government company, will be adjudicated. These units, with a combined minimum capability of providing 84MWh, will be crucial in the transition towards renewable energy since they help overcome the problem of intermittency.

With the government keeping energy subsidies intact, Maltese consumers will continue paying among the lowest electricity prices in Europe in 2025. However, the indiscriminate nature of the assistance will also leave Maltese consumers oblivious to the need to make judicious use of electricity and invest more in energy-efficient processes and machinery. It also makes it politically harder to reduce or withdraw subsidies when they are no longer necessary.

Political disruption

The most exciting developments are likely to occur on the political front, with two new political parties aiming to disrupt the Labour-Nationalist duopoly.

Arnold Cassola has pitched his tent in the middle, and 2025 will see the formal launch of his party. Cassola has already been hobnobbing with European centrists like French Prime Minister François Bayrou in what is likely to be an appeal to moderate, middle-of-the-road voters.

The other political outfit is Partit Malta Progressiva (PMP), which is the brainchild of former Labour MEP Cyrus Engerer and former policymaker in Helena Dalli’s European Commission cabinet, Silvan Agius. The party aims to position itself on the left of the political spectrum, trying to capture the progressive zeal that characterised the Labour Party between 2013 and 2020.

If these two new formations have functioning structures, the political scene may experience some interesting twists and turns in 2025. For the two traditional big parties, 2025 will be a waiting game, a time when they will observe the potential impact of the new parties and start sharpening their knives before starting their electoral engines in 2026.

Nonetheless, several factors beyond the control of the political parties could have a direct impact on the political arena in 2025.

The long-awaited Yorgen Fenech trial is likely to take place in the new year, and this could be a disruptor, given the strong political undertones that characterised the murder of Daphne Caruana Galizia.

The trial could reopen certain wounds for the PL, as could the impending arraignment of Keith Schembri over accusations that he breached the Official Secrets Act when he allegedly divulged sensitive information from the Caruana Galizia murder police investigation to third parties.

Disruption can be unsettling because of the uncertainty it creates, but it can also be positive, as it presents opportunities for innovation and change. The new year will be a test of resilience on several fronts for the traditional political parties, Malta, the EU, and the world.