Read the headlines about political extremism on the march in the European newspapers and you might conclude that Europe is succumbing to political hysteria. But the biggest danger is not actually hysteria, it is complacency. It is highly likely that Europe’s leaders will try to shrug off the results of the European elections and retreat into politics as usual. That would be a big mistake — possibly a fatal one.

Apparently, there will be no serious adjustments of policy, since it will just be too hard to agree what to do. That kind of complacency is Europe’s default reaction to political revolts from the unenlightened masses, otherwise known as voters. But that cannot be allowed to happen this time.

Unfortunately, the arguments for the EU simply carrying on regardless sound plausible — particularly if you are based in Brussels. Extremist and anti-establishment parties surged, but they still only took about 25pc of the vote across the EU. The centre-right and the centre-left still dominate the European Parliament. Europe has just gone through the worst recession in decades, so a large anti-establishment vote is only to be expected — and the European elections are often used to register a protest. The groups that have grabbed the headlines this time — such as the National Front in France, and the UK Independence party in Britain — stand almost no chance of gaining control of a national government.

What is more, the extremes themselves are very divided. Ukip say it will not sit with the National Front on the grounds that it is a racist party. The National Front itself is too fastidious to sit with Greece’s fascistic Golden Dawn. Meanwhile, Germany’s new eurosceptic force, Alternative für Deutschland, finds even Ukip too extreme. And those are just the divisions on the right. If you add in the voices of the extreme left — Syriza which came out ahead in Greece and Podemos, a new anti-capitalist force in Spain — you get a further raft of discordant demands.

The EU should shelve plans for ever more ferocious central control of national budgets — and also forget about plans for bigger EU taxes and transfers. The goal should be to retain as much national autonomy as is feasible, in a single-currency zone

All of that makes it extremely tempting simply to dismiss the European elections as an aberration — or, worse, as confirmation that European integration must go further and faster, so that it can finally work properly.

But the aberration argument does not stack up. The fact is there have been signs of disillusionment with the European project for decades, which have consistently been ignored. In 2005 France and the Netherlands voted to reject a new integrationist EU constitution — at which point most other countries shelved plans to hold their votes. But rather than abandon the constitution, the EU repackaged it as the ‘Lisbon Treaty’ — and forced it through, without popular approval. That kind of arrogance positively begged for a populist backlash.

The argument that the populist vote is still too weak and incoherent to merit a response does not really work. Anti-establishment parties have topped the polls in France and Britain — the EU’s second- and third-largest economies. The fringe parties have also made noteworthy gains in Spain, Italy and even Germany.

And while the populists detest each other and advance bizarre or contradictory ideas, they do share a common theme: the strong belief the EU has become too powerful, at the expense of the nation state.

To argue that the weekend’s vote was actually about immigration or the economy — and not about Europe — is to miss the point. Two of the basic functions of the nation state have traditionally been to control borders and national finances. Both functions have been largely ceded to the EU — particularly if, like France, you are a member of the Schengen border-free zone and the European single currency.

The challenge for EU leaders now is to see if they can restore some national democratic control over these key areas without actually dismantling the union itself. That may not be do-able. But they are going to have to try.

On immigration, David Cameron, Britain’s prime minister, has shown one possible route by trying to focus on ‘welfare tourism’. This tactic may not work, since it does nothing to challenge the basic principle of freedom of migration within the EU. If focusing on welfare is not enough then, regrettably, more radical ideas such as a partial rollback of Schengen — proposed by Nicolas Sarkozy, the former (and possibly future) French president — will come on to the table.

Control of economic and fiscal policy can never be fully restored, as long as countries remain in the euro; one reason to suspect that the single currency may ultimately break up. But in the meantime, the EU should shelve plans for ever more ferocious central control of national budgets — and also forget about plans for bigger EU taxes and transfers. The goal should be to retain as much national autonomy as is feasible, in a single-currency zone.

It is unlikely that either of these ideas will gain traction with the EU leaders. Instead these politicians are likely to indulge in a classic insider game — as they stage an incomprehensible argument about the next head of the commission and the relative powers of EU institutions. If they head down that path, they will deserve everything they get at the next elections.

Published in Dawn, Economic & Business, June 2nd, 2014