Europe is facing turbulent times, marked by declining competitiveness across key sectors and industries, alongside an increasingly volatile geopolitical environment. Slovenia finds itself at the center of these developments, while also confronting significant domestic challenges.
The European Commission's May 2026 forecast paints a stark picture, projecting Slovenia's deficit to hit 3.3% of gross domestic product this year and rise to 3.5% next year. Notably, this fiscal strain comes during a period of strong economic activity and near-full employment.
This reflects the previous government's policy choices. The former administration raised minimum wages and increased public spending. While these measures may have delivered short-term political objectives, their long-term fiscal costs could prove substantial.
Accordingly, public expenditure must be reformed to ensure long-term fiscal sustainability.
A difficult inheritance
The OECD has warned that wages and labor costs in Slovenia are growing significantly faster than productivity, undermining the country's competitiveness. Indeed, in the final quarter of 2025, Slovenia recorded the highest increase in labor costs in the EU, at 15.9%, a surge that was not matched by productivity gains.
The challenges extend beyond fiscal policy to national security. Slovenia recently received a warning from NATO over the accounting of defense expenditures, with the alliance raising concerns that infrastructure projects with limited military relevance had been counted toward its targets.
Alarmingly, the former Prime Minister Robert Golob even proposed to hold a referendum on Slovenia's exit from NATO last year — an erratic move likely halted by pressure from international partners. This period was further marred by serious concerns over the rule of law and high-profile corruption scandals tied to the government.
Setting a new direction
In foreign policy, Prime Minister Janez Janša must confront this difficult inheritance, but he can draw on his extensive European experience and consistent support for Ukraine, having been among the first Western leaders to visit Kyiv after Russia launched its full-scale invasion.
He should also strengthen bilateral relations and security cooperation with the United States and other democratic allies, while renewing close cooperation with neighboring countries and partners across Central Europe.
While the previous government often aligned itself with Spain's polarizing positions on foreign policy issues, particularly on the Middle East, the new administration will seek to restore balance by shifting from a more activist approach toward pragmatic diplomacy.
Slovenia must also honor its NATO commitments and contribute responsibly to collective defense.
Security is a fundamental priority for both Slovenian and European citizens. On migration, the government will pursue a balanced and effective approach, distinguishing between legal and illegal migration and respecting the Schengen acquis.
The new government must also stabilize public finances and pursue a rigorous fiscal policy.
On tax policy, the focus will shift toward easing the burden on labor and creating a more competitive tax environment without introducing new burdens on the broader economy.
This change is urgently needed, as Slovenia has one of the highest labor tax wedges in the OECD, reaching 45.3% for an average single worker in 2025, well above the OECD average of around 35%.
Regarding the European Green Deal, the government will support a pragmatic and technologically neutral green transition that preserves economic competitiveness and Europe's industrial base, rather than pursuing timelines that risk placing disproportionate burdens on households and businesses while competitiveness.
The road ahead will not be easy. The new minority government will require significant coordination and issue-based support from the opposition.
Europe is gaining an experienced leader who, despite these challenges, believes in a stronger and more competitive European Union.
With his clear political vision and determination, Janša has expressed hope that this mandate will be "systematic and boring" — meaning a government focused on steady, responsible administration rather than political turmoil and controversy.
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