European Union

Europe defence push requires clearing M&A barriers

27 Feb 2024

The region is hiking military spending to aid Ukraine and become less dependent on the US. Yet governments are squandering investment on incompatible weapons and systems. Creating more regional champions, like aerospace giant Airbus and missile maker MBDA, is a top priority.

Why central banks risk making more mistakes

27 Feb 2024

Western rate-setters were late in fighting inflation. In this Exchange podcast, TS Lombard economists Dario Perkins and Davide Oneglia argue that, as price growth abates, the US Federal Reserve and European Central Bank may be too slow in easing monetary policy.

Russia risk looms over Euroclear profit windfall

22 Feb 2024

The Brussels-based clearing house is a reluctant depository for sanctioned Russian assets. It made 5.7 bln euros before tax last year thanks to cash sitting on its balance sheet. But the bonanza also makes it a target. A blow to financial stability would far exceed one-off gains.

The green agenda’s best shot at a revival

13 Feb 2024

Economic distress prompted by globalisation undermines support for the energy transition, climate change economist Valentina Bosetti tells The Exchange podcast. That matters as key US and EU elections approach. Using proceeds from carbon taxes to address inequality is paramount.

Europe’s wilting bourses get fresh cause to unite

12 Feb 2024

The likely de-listings of Italy’s Saras and Tod’s add to a wider exodus from euro zone stock exchanges. Part of the problem is a lack of new European companies to replace them. But Europe could also help itself if its equity market rules and trading were less fragmented.

EU’s AI ambitions may fail on two fronts

8 Feb 2024

Brussels wants to set the global standard for artificial intelligence rules while helping Europe’s most promising startups to thrive. But its AI Act may be too fussy for others to copy, even as risks remain. And it will do little to help local champions take on US tech giants.

Red Sea delays are no panacea for European EVs

5 Feb 2024

Suez Canal blockages mean Chinese electric vehicles take longer to get to Europe. But these don’t look bad enough to close the price gap with EU rivals. The most likely upshot is a slower rate of domestic EV adoption, rather than a change in the competitive pecking order.

Budget deal leaves EU isolated in Ukraine aid push

2 Feb 2024

The EU avoided a crisis by salvaging its 50 bln euro funding plan for Kyiv after Hungarian strongman Viktor Orbán fell in line. Europe is, however, isolated in its drive to support Ukraine, as long as a $61 bln similar aid package is stalled in the US Congress.

ASML is underplaying its strengths

24 Jan 2024

The semiconductor giant kept its 2024 outlook reined in despite hefty quarterly earnings. US and Dutch export controls that affect chipmaking tools have begun to dip into China sales. But a hefty orders backlog and rising chip demand should help the $330 bln group fly higher.

ECB is battling an imaginary wage spiral

24 Jan 2024

European Central Bank President Christine Lagarde is set to hold rates this week because she fears rising salaries will boost inflation. Yet euro zone workers are getting raises of just 3.8%, down from a year ago. Frankfurt may not want to cheer bigger pay, but it can ignore it.

It will take more than Draghi to boost EU growth

22 Jan 2024

Europe can’t decide if it will be more competitive with open markets or heavily protected national champions, and it wants Mario Draghi to pick. Italy’s former PM is more likely to reflect than resolve tensions among members. But the bloc can’t up its game behind closed doors.

Poland’s path to euro will be long and arduous

16 Jan 2024

New Prime Minister Donald Tusk wants to bring his country closer to the EU. As the co-author of an old plan to strengthen the monetary union, he might be expected to apply to join the single currency. Politics and economics make this a long-term goal at best.

EU hitches anti-Orbán plot to Draghi trial balloon

9 Jan 2024

European Council chief Charles Michel’s decision to leave early means Hungary’s Viktor Orbán could take charge of leaders’ meetings and represent them in high-profile summits. Doing whatever it takes to fill the void, even tapping Italy’s former PM for a short time, makes sense.

Bond deluge will nudge ECB to softer rate stance

4 Jan 2024

European countries’ fiscal needs and the end of central bank buying mean a record 675 bln euros of sovereign debt will be on sale in 2024. That may keep borrowing costs high for states like Italy. ECB President Christine Lagarde can help by meeting investor hopes for swift cuts.

EU tech rules will create clicks, not competition

27 Dec 2023

Brussels wants to force Google, Meta and Apple to open up app stores, messaging networks and search engines. The US giants will have to let startups compete and offer consumers more opt-outs. It’s likely to result in lawsuits and hassle for users rather than rivals for Big Tech.

EU debt rules offer unity at price of relevance

21 Dec 2023

European Union finance chiefs reached a deal on a new fiscal pact, breaking a post-pandemic stalemate. Germany won austere deficit and debt targets, yet pain will be diluted by French-fought delays and concessions. The net result is an overly complex system that may not work.

EU accession carrot keeps Ukraine aid hopes alive

15 Dec 2023

Brussels has agreed to start membership talks with Kyiv, but Hungary blocked 50 bln euros earmarked for the war-torn country. The prospect of joining the 27-nation bloc matters more to Ukraine than the short-term financial setback, which can be overcome in the coming months.

EU’s Russian asset grab would backfire

14 Dec 2023

Brussels is asking EU governments to funnel to Ukraine the returns on some 180 bln euros of frozen Russian assets. That would only marginally help Kyiv, even if Western support seems to be wavering. And it would open a legal and political can of worms.

Capital Calls: OpenAI’s Microsoft dilemma

11 Dec 2023

Concise views on global finance: When boss Sam Altman’s ouster threatened to implode the ChatGPT maker, $2.7 trln backer Microsoft helped restore order. That necessary boon, however, will draw ever-more trustbuster scrutiny about tech giants’ unshakable influence in AI.

UK, EU trade détente leans on Chinese threat

6 Dec 2023

The European Union fell in line with UK demands to ease part of Boris Johnson’s Brexit deal. Delaying tariffs on battery parts helps carmakers like Volkswagen sell to Britain and fend off competition from China. But Brussels has reason to be tougher on other issues, like finance.