The main problem was funding, the lesson from Hermes is that a small shuttle costs virtually as much as a big shuttle**.
From van den Abeelen's book: Munich 1991, cost estimate of 6000 MAU (equivalent 2024$16.7B, on top of the 1000 MAU already spent) for the 1991-2000 period... considering the same ESA ministerial planned a 2002 first launch and 2004 operational status, that these were estimate before production began, and the book mentions contemporary counter-estimates already a Billion Accounting Unit above (8000 MAU), it seems likely the final cost of development would have ran above the 10,000 MAU (2024$ 28.0B)
And then add the cost of Ariane 5 - My nearby issue of CnesMag says 45 Billion Francs, average conversion rate over the A5 development is 5.5 Francs to USD, peak of A5 funding was in 1992 today that's 2024$ 18.6B*.. and that's not counting the A5 ECA upgrade that would be required to lift Hermes... another billion.
So 35 Billion minimum, likely 45 Billion if not more to get a shuttle and its launcher! Meanwhile the shuttle cost about 10 billion to develop throughout the 70s and early 80s, about 40-50 Billion today (Energia-Buran was also in the same general range, but I won't try converting rubles)
Broadly speaking, Hermes would have required the same annual funding as Ariane 5, which averaged a quarter of ESA's budget (you can check the annual report on their site) through the 90s, so there's no Hermes without that 25% budget increase, or cuts elsewhere..
Considering the european countries already squabbled intensely over the much lesser funding of Columbus or supporting Ariane 5's difficult beginnings, I don't see it happening.
*As much as I like to criticise A6, I have to admit that it's cheap to develop compared to A5, thanks to the fact it reuses so much of its infrastructure and technologies, A5's development cost in 1992 (1050 MAU) alone was equivalent to 2/3 of A6's total development cost...
**But that was already predicted by NASA in the early 70s, and, thanksfully, convinced the congress, OMB and presidency.
