European Union

EU’s wobbly budget rules can bolster shaky economy

3 Jun 2024

Eleven countries have breached Brussels’ fiscal levees, with deficits larger than 3% of GDP. But the limits come with loopholes and allow for delays. That’s good news for a bloc desperate for growth to rival the US. For Europe, weaker rules are better than misguided austerity.

ECB has almost vanquished its final inflation foe

30 May 2024

Steeper bills for hotels, transport and other experiences are the European Central Bank’s key remaining enemy. Last month, services accounted for 68% of the rise in consumer prices. But those pressures, and wage growth, are waning, freeing rate-setters to start a series of cuts.

Technocrat PM will save Dutch voice inside the EU

29 May 2024

By choosing civil servant Dick Schoof, The Hague put pragmatism before politics in the premier’s slot. Far-right Geert Wilders won at the polls but elected to pass on the job. This will help the Netherlands keep its sway over key issues like EU debt and the green transition.

Antitrust worries risk clipping EU airlines’ wings

24 May 2024

Groups like Lufthansa and IAG are seeking greater scale to better compete globally. But Brussels frets that regional tie-ups will lead to higher fares and reduced consumer choice. Blocking the $8 bln German firm’s play for smaller peer ITA could mean other deals won’t take off.

China tests EU resolve on export trade fight

14 May 2024

France’s Emmanuel Macron got little to show from President Xi Jinping’s European tour this month. In this Exchange podcast, MERICS expert Grzegorz Stec explains the difficulty of managing ties with Beijing and why balancing risk and business opportunity is so tricky.

ECB risks tripping over euro zone’s green shoots

14 May 2024

Europe’s economy is showing signs of life. Services are expanding faster than in the US. If consumers start spending, GDP could grow by more than the 0.6% forecast by the European Central Bank. That, though, would make it hard for policymakers to embark on a series of rate cuts.

EU’s China car tariffs face a very high bar

6 May 2024

Brussels would need levies as high as 50% on Chinese imports to slow sales by BYD and rivals, double recent precedents. It'd prompt a sharp response. President Xi Jinping can use his visit this week to remind Europe’s carmakers how much they stand to lose in such a scenario.

Von der Leyen’s China plan is all bark and no bite

30 Apr 2024

To keep her job atop the European Commission, Ursula von der Leyen will talk tough but wield a small stick towards Beijing. Open supply lines from the People’s Republic are key to Europe’s economic well-being. Brussels’ rhetoric will likely be harsher than sanctions and tariffs.

Sánchez’s psychodrama leaves Spain at loose end

29 Apr 2024

PM Pedro Sánchez is staying on after threatening to resign over a court probe into his wife’s dealings. He appears weakened before a series of elections, raising doubt on his ability to push for reforms and ensure the country remains the fastest-growing major European economy.

Ukraine’s $61 bln lifeline is not enough

29 Apr 2024

The United States last week cleared a vital aid package, but Kyiv still needs a medium-term funding plan to withstand Russia’s onslaught. Mobilising Moscow’s $320 bln of frozen central bank assets to provide compensation for war damages should be central to this.

EU Fannie Mae idea is bad answer to good question

25 Apr 2024

A report led by former French central banker Christian Noyer advocates more securitisation to help fund $1 trln of annual green and digital investments. He’s right that bank balance sheets need unclogging. But subsidising the slicing and dicing of mortgages isn’t worth the risk.

What to do about the EU’s relative decline

22 Apr 2024

The European Union will become marginalised if it continues to shrink compared with other regions. Two former Italian prime ministers, Enrico Letta and Mario Draghi, are coming up with remedies. But anxious leaders may lack the will to drink the necessary medicine.

EU bank-saving raid can boost tired capital market

17 Apr 2024

European households have 33 trln euros of rainy-day cash, but not much invested in equities. Former Italian PM Enrico Letta reckons savers could fund the green transition if they had access to better stock funds. Forcing countries to lower tax and other barriers would help.

EU tech rules bite ever-closer to Apple’s core

10 Apr 2024

As Brussels gains new powers and enforces a March music-streaming ruling, the European Union can finally force Apple to change how the iPhone works with outside developers. A US antitrust case adds pressure. Users may not like the results, which means investors should care too.

Ukraine loan is matter of politics and accounting

25 Mar 2024

Lending the country $300 bln backed by its claim for war damages against Russia has several benefits compared to rival ideas for unlocking support. Kyiv’s allies would still need to find the cash, though. Here is how they could navigate the political and financial obstacles.

‘Twin peaks’ can keep EU capital market push alive

21 Mar 2024

A two-pronged approach can aid Europe’s drive for a single financial market. By splitting oversight of the system’s safety from the policing of daily operations, Brussels can avoid a David Lynch-style mystery on who killed its plan to boost investments and savings across borders.

ECB’s money drain has silver lining for markets

14 Mar 2024

The European Central Bank is ready to exit its huge stimulus programme. With 4.7 trln euros of bonds on its books, that will take time but policymakers want few surprises. A new regime of setting rates and relying on banks to ask for loans will wean them off cheap money.

EU’s spending snags spoil joint borrowing success

12 Mar 2024

Europe’s 800 bln euro stimulus plan is stuck. The bonds that finance it sell like hotcakes, but so far it has paid out only 225 bln euros as countries struggle with projects. Unless the bloc can show it can use the money it raises from investors, it will lose much-needed funds.

Apple’s Epic fail powers up EU tech oversight cred

11 Mar 2024

The $2.6 trln firm quickly reversed its decision to close ‘Fortnite’ maker Epic Games’ developer account. Frowns from the EU, which is going after Big Tech via fresh laws, look to have played a role. The episode is as much a victory for the bloc’s credibility as it is for Epic.

Europe will struggle to unite if Ukraine loses

11 Mar 2024

Jean Monnet, one of the European Union’s founders, predicted it ‘will be forged in crises’. Russian success in Ukraine could be the wake-up call the bloc needs to forge closer security ties. But it could also fragment under the strain. All the more reason to ramp up support now.