European Union

ECB’s crisis tool works best if it’s never used

30 May 2023

The European Central Bank is touting its powers to buy sovereign bonds if they come under attack from the market. That has kept traders in check, so far. The trick for Frankfurt officials is to convincingly threaten to deploy emergency measures without ever having to.

AI speed benefits now apply to EU boycott U-turns

26 May 2023

On Wednesday Sam Altman threatened to quit Europe if it “over-regulates” his booming startup OpenAI. He’s now rapidly rowed back. As with their disruptive new technology, AI mavens may have a shrewder sense than older US peers of when to stop poking the Brussels bear.

Supply chain scrutiny may upend EU solar ambitions

23 May 2023

Renewable groups must forgo photovoltaic components from China’s Xinjiang to comply with forced labour curbs. Yet the region produces 35% of the pure silicon needed in panels, and US firms are scooping up the non-Chinese supply. Enforcing a ban may scupper EU green targets.

Transatlantic tech-tax truce is on a knife edge

23 May 2023

EU-US spats over levies on the likes of Amazon have taken a breather while a global pact advances. But sabres are rattling, led by French Finance Minister Bruno Le Maire. Washington may well be patient with the pace of promised rollbacks, but any new levies would break the truce.

Meta becomes cross-border tech mascot

22 May 2023

The EU smacked the $630 bln social media giant with a record $1.3 bln fine over data transfers to the US. Meta will fight it, but a fix requires a cross-border agreement and differing philosophies on data access make that hard. Without it, Meta’s fine is a bigger tech problem.

Debt conundrum gives Italy weak hand in EU talks

18 May 2023

The pandemic and the war have taken the country’s indebtedness off investors’ radar. Yet high interest rates, slower growth and a budget deficit mean Rome will struggle to cut its fiscal burden. That makes it harder for PM Giorgia Meloni to ask for lenient European rules.

Activision is victim of clashing trustbuster whims

16 May 2023

Microsoft’s bid for the “Call of Duty” maker won Europe’s approval, with concessions, after UK and US regulators pushed back. International enforcers’ divergence on whether companies can offer fixes for deals they don’t like could be an impossible hurdle for big-ticket M&A.

Ukraine rebuilding would be small wager for Europe

16 May 2023

The Ukrainian economy shrank by 30% last year but the war didn’t break it. Reconstruction will cost $410 bln over a decade, according to the World Bank. The European Union could fund the bulk of those efforts by spending just 0.1% of annual GDP. That would be a shrewd investment.

Lufthansa gives Brussels a state-aid wake-up call

11 May 2023

Europe’s top court has ruled the $12 bln airline got too much of a sweetheart deal in its pandemic aid package. The stakes for Lufthansa look small. But it’s a bad omen for a European Commission facing increasingly tricky decisions on how far to loosen its single market.

EU debt’s credibility problem is worsening

9 May 2023

Borrowing costs of the bloc’s jointly issued bonds have risen above those of similarly rated sovereigns. The EU’s inability to deliver on promised joint revenues is exacerbating the impact of higher rates. That in turn reinforces investor fears that Brussels debt isn’t permanent.

Lagarde fine-tuning will aid sputtering euro zone

4 May 2023

The European Central Bank’s move to raise rates by just 25 basis points and speed up its exit from bond-buying signals a less aggressive approach. High inflation calls for more hikes, but Frankfurt’s decision to use a scalpel rather than a hammer will benefit Europe’s economy.

Capital Calls: Exxon, US regional banks

28 Apr 2023

Concise views on global finance: Exxon’s two golden eggs are the Permian and Guyana; market composure gives time for a First Republic fix.

Capital Calls: US GDP, Eli Lilly, EU budget

27 Apr 2023

Concise views on global finance: Consumer spending provided fragile support for the US economy in the first quarter. Meanwhile pharma group Eli Lilly is racing against rising obesity expectations, and the European Commission faces German hurdles to replacing its budget rules.

Dollar bulls are praying for a mild downturn

26 Apr 2023

The greenback has lost 14% versus the euro since September, as investors bet on Europe’s recovery and China’s reopening. Inflation and interest rate trends still favour the single currency. The best hope for the buck is a minor economic slowdown to boost its safe haven status.

EU bank crisis plan makes best of bad landscape

18 Apr 2023

The European Union’s proposal to extend its bank-failure system to smaller lenders is an attempt to work around political constraints. Broader use of deposit guarantee schemes should limit bailouts and help troubled banks find buyers. But even sensible tweaks may not be possible.

Rome foot-dragging can help EU kick bad aid habits

18 Apr 2023

The Italian government is clashing with Brussels over 19 bln euros in pandemic loans. Missing milestones is bad policy for the biggest recipient of European aid. But the country’s pushback may have a silver lining if it prompts the bloc to be more flexible with money.

New EU debt rules have way to avoid past mistakes

4 Apr 2023

The European Union’s old stability pact was a poorly fitting straitjacket, yet recrafting it is politically fraught. The bloc now aims to replace strict diktats with medium-term goals. A successful framework can revive growth. But it will only work if countries follow it.

Europe throws ignition cars a thin lifeline

28 Mar 2023

A last-minute EU deal will exempt autos running on carbon-neutral propellants from a 2035 combustion engine ban. That may help sports carmakers like Ferrari. Such fuels are costly and energy-intensive. Brands betting big on electric rides, like VW, will struggle to change tack.

Capital Calls: Saudi and Credit Suisse, EU patents

27 Mar 2023

Concise views on global finance: The resignation of the chairman of Saudi National Bank, Credit Suisse’s largest shareholder, may prompt a quiet period for other investors; big companies want Europe’s new system for registering intellectual property to cover more countries.

EU and US green arms race misses bigger picture

16 Mar 2023

The European Union’s response to Joe Biden’s Inflation Reduction Act gives member states leeway to push back with their own green subsidies. Yet plans for production targets are misguided. To decarbonise while managing China risks, it’s better to seek common ground with the US.