Defence bond is the way to boost armed forces spending
Europe now faces its biggest military threat to peace since the Cold War without being able to count on US backing — and with the opening stages of a trade war triggered by President Trump making a global slump possible.
These events have overtaken the fiscal rules Labour promised at last year's election. Rachel Reeves, the chancellor, has rightly enforced economic stability after years of Conservative government economic failure but emerging geopolitical turmoil requires fresh innovation.
Germany has drastically changed its fiscal rules, amended its constitution and committed itself to much higher defence spending, paid for in part by increased borrowing, along with a ten-year €500 billion (£420 billion) fund to boost infrastructure investment. EU leaders have pledged €800 billion to boost military spending by
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BBC News
36 minutes ago
- BBC News
The World Tonight No sign of reconciliation between Trump and Musk
US President Donald Trump is "not particularly interested" in speaking to Elon Musk after the tech billionaire and former close political ally turned on him in a bitter and public war of words. Initial reports that the pair had scheduled a phone call came to nothing. With some among the MAGA branch of Trump's supporters rounding on Musk, we explored the factional infighting and what impact it might have on the Big Beautiful Bill which Trump wants the Senate to pass, but which Musk opposes. Also on the programme, can supporters of the European Convention on Human Rights head off criticism by adapting the treaty? That's what the Secretary General of the Council of Europe seems to suggest. We hear from former Attorney General Dominic Grieve. And we speak to the Hollywood actor turned cryptocurrency sceptic about his new documentary on the phenomenon, premiering at the SXSW festival in London.
Wales Online
an hour ago
- Wales Online
The £6bn rail line argument that masks what you should be really angry about
Our community members are treated to special offers, promotions and adverts from us and our partners. You can check out at any time. More info Over the last few days, there has been one hot topic in the world of Welsh politics - a train line which will run between Oxford and Cambridge. Given these two cities are roughly 200 miles from Wales, you can be forgiven for asking why. East West Rail is a railway project which will link Oxford and Cambridge at an estimated cost of £6.6bn. Any money spent on it will trigger extra payments to Scotland and Northern Ireland so they can spend it on their transport systems. But, just as has been the case throughout the HS2 debacle, there won't be any extra money for the Welsh Government. The reason for this is both incredibly simple and reasonable on the surface but devillishly complicated and truly unfair beneath it. It may not necessarily be a scandal in itself. But it symbolises everything that is wrong with how rail funding is allocated in England and Wales. For our free daily briefing on the biggest issues facing the nation, sign up to the Wales Matters newsletter here On the face of it, this issue isn't linked to the spending review that has been happening in Westminster for the last six months or more and of which chancellor Rachel Reeves will stand up in the Commons on Wednesday and deliver the conclusion. Yet it helps shed a light on why that will be enormously complex to understand and why the real story may not be the one you read in headlines that evening. So bear with us while we go through it. The fury from politicians Opposition politicians in Wales have been fulminating about East West rail. They say that the rail line should have been classified as an England-only project like Crossrail so that the Welsh Government would get a guaranteed share. Lib Dem MP David Chadwick said Wales will lose out to the tune of between £306m and £363m as a result. Describing it as another HS2, he said: "Labour expects people across Wales to believe the ridiculous idea that this project will benefit them, and they are justified in not giving Wales the money it needs to improve our own public transport systems. 'It's a disgrace, and it shows there has been no meaningful change since in the way Wales is treated since Labour took power compared to the Conservatives." Plaid Cymru's leader Mr ap Iorwerth took a similar tack, telling plenary: "For all the talk of the UK Government acknowledging somehow that Welsh rail has been historically underfunded, this is some partnership in power." Yet, while there's a lot of truth to what they're saying, it's also much more complicated. Which is where the spending review comes in. Comparability factors There will be so many numbers in the paperwork that accompanies Wednesday's spending review that finding the most important ones isn't straightforward. Yet if you want to know just how much of the England and Wales transport pot is going to be sucked into paying for massive rail projects in England like HS2 (£66bn) or East West rail (£6bn) or all the tram/train projects being promised in England outside London (£15bn), then look out for the overall transport comparability factor for Wales. Very simply, this is the number that the Treasury uses to work out how much the Welsh Government should get for every £1 it spends on transport in England. The reason everyone has been so, so angry about HS2 and the massive billions being poured is that back in 2015, Wales used to get a comparability factor of 80.9%. Yet when the number crunchers in Horse Guards Road sat down to work out how much the Welsh Government should get at the last spending review in 2021, that comparability factor fell to just 33.5%. Ouch. For every £1 spent on transport by Westminster, since the last spending review the Welsh Government has received a population adjusted share (5%) of 33.5%. Or about 1.6p. For context, it used to be around 4p. If Mr Chadwick and Mr Iorwerth are right and the UK government plans to plough even more money into rail in England in the coming years on projects like HS2, East Coast and what the Tories used to call Northern Powerhouse rail, then the new comparability factor that the Treasury mathematicians will conjure up this time could be even lower. But even that is massively misleading. Because if the UK government also promises to plough vast sums into rail in Wales then the comparability factor for the Welsh Government would not rise - it would fall further still. Is your mind boggling yet? We said it was complex. What the Welsh Government wants Because the Welsh Government isn't responsible for rail infrastructure spending, the transport comparability factor really just reflects how much money is going on rail. The less that's spent on rail, the higher a share of the overall transport pot the Welsh Government gets. The more that goes on rail, the lower a share of the overall transport spot the Welsh Government gets. The real problem for Cardiff Bay then is not the comparability factor. Neither is it the fact that East West rail isn't classified as England-only. The problem, as far as the Welsh Government is concerned, is the fact that the England and Wales rail pot itself isn't shared fairly. HS2 and East Coast rail are the symbols of a system that is broken that pours vast sums into English rail projects while Wales misses out. Even if they were classified as England-only, the money would go to the Welsh Government which isn't responsible for rail infrastructure spending. "The way that the system operates at the moment—for years I've been saying—is redundant," Wales' transport minister Ken Skates has said. "The east-west line, which has been in development, I believe, for around about 20 years now, is part of the rail network enhancements pipeline, where everything in a large footprint, a substantial footprint, including Wales, is packaged together. "Where you have all schemes in England and Wales packaged together in what's called the regional network enhancement pipeline it means that projects in Wales are always going to be competing on the business case with projects in affluent areas of the south-east, of London. That means that we are at a disadvantage. "I want to see it change. I've been saying it for years. There's nothing new in this story. I've been saying that we need reform for years and suddenly people have woken up to it." Wales' First Minister Eluned Morgan has said the same. "What we have is a situation where there is a pipeline of projects for England and Wales. Are we getting our fair share? Absolutely not. Are we making the case? Absolutely." "I've made the case very, very clearly that, when it comes to rail, we have been short-changed, and I do hope that we will get some movement on that in the next week from the spending review," she said. What does this mean for the spending review When Rachel Reeves stands up in the Commons on Wednesday, we fully expect she will announce some funding for rail in Wales, as you can see in our piece here, and our expectation is that will be about the rail stations earmarked in the work by Lord Burns after the M4 relief road was axed. They would be in Cardiff East, Parkway, Newport West, Maindy, Llanwern and Magor. But what matters is how much and when - and how that compares to the money being spent in England. Imagine the chancellor announces a few hundred million pounds for those rail stations in Wales in the spending review, what we do not - and will likely not know for many years - is whether that amount is a fair reflection of the mass spending she has announced in England because we know she has also touted £15bn of improvements in England. It will likely take years for academics to assess what kind of share of the rail pot has been spent in Wales. In the past, it certainly has not been fair. In 2018, a Welsh Government commissioned report by Professor Mark Barry estimated that the Network Rail Wales route, which covers 11% of the UK network, received just over 1% of the enhancement budget for the 2011-2016 period. In 2021, the Wales Governance Centre told MPs on the Welsh affairs select committee that had rail been fully devolved to the Welsh Government, Wales would have received an additional £514m for enhancements via Network Rail had rail infrastructure been devolved as it is in Scotland. So when Leeds West and Pudsey MP Ms Reeves gets to her feet in the Commons on Wednesday, you can pretty much guarantee there will at least one or two headlines relevant Wales. But we may not understand what they really mean for a while yet and East West rail won't help us understand either.
Auto Blog
an hour ago
- Auto Blog
Mercedes CEO Has a Trump Tariff Deal That Could Reshape US-EU Auto Trade
Ola Källenius's comments to Der Spiegel comes as German automakers like Mercedes, BMW and Volkswagen negotiate with the Trump Administration. Tariffs have the auto industry on watch Hours before an event in Michigan on April 29, President Trump signed two executive orders aimed at reducing the impact of trade tariffs on the automotive industry. One order prevents automakers, who face 25% tariffs on auto imports, from being subject to additional levies on materials. The other order allows automakers to apply for tariff relief, which will reduce a portion of the costs associated with their imported components. However, these benefits will be gradually phased out over the next two years. Ola Källenius, CEO of the Mercedes-Benz Group, and Winfried Kretschmann, Minister President of Baden-Württemberg, stand in the production area during a tour of the Mercedes-Benz passenger car plant in Rastatt. During a rally that night in Michigan, Trump described this move as providing 'a little flexibility' to the automotive industry, hoping to persuade automakers to produce their cars and components in the United States. He said, 'We gave them a little time before we slaughter them if they don't do this. They're going to make so much money. They're going to have so many jobs.' Despite the developments, German luxury car manufacturer Mercedes-Benz withdrew its earnings guidance for 2025 during the announcement of its Q1 results. This decision was driven by uncertainty regarding the potential impact of President Trump's tariffs on imported vehicles. The company also stated that if auto tariffs remained at their current levels, it would decrease profit margins by 300 basis points on cars and 100 basis points on vans. Mercedes CEO offers some guidance on a potential tariff solution In a new interview with German business publication Der Spiegel, Mercedes-Benz CEO Ola Källenius said that while he is looking at different scenarios, the kind of investments he has to make are ones that could last for decades, rather than ones made 'in response to a volatile situation' such as the current US-EU tariff situation that is currently unfolding. Recognizing that the current administration has the impression 'that we in Europe are closed to certain issues and only demand openness where we have strengths,' the CEO proposed a deal meant to balance its imports and exports. Autoblog Newsletter Autoblog brings you car news; expert reviews and exciting pictures and video. Research and compare vehicles, too. Sign up or sign in with Google Facebook Microsoft Apple By signing up I agree to the Terms of Use and acknowledge that I have read the Privacy Policy . You may unsubscribe from email communication at anytime. 2025 Mercedes-Benz G 580 EQS — Source: Mercedes-Benz In his proposal, Källenius would allow duty-free imports of U.S.-built cars into Europe in exchange for tariff waivers on an equal number of vehicles exported by EU automakers to the U.S., adding that it would alleviate and fulfill its desire to reindustrialize and become an attractive destination for companies to set up factories for exported goods. 'For every car that leaves the USA or Europe, a car from the other side comes in duty-free,' Källenius told Spiegel. 'We have put this idea to both sides, and it is a possible component of the negotiations between the USA and the EU.' Such a solution would work for a company like Mercedes-Benz. In the same interview, Källenius noted that Mercedes 'is a major producer' of cars in the United States, adding that the company builds and sells around 350,000 vehicles in the country, which could count for consideration in trade talks. 'But the models we build and sell [in the U.S.] are not the same,' Källenius told Spiegel. 'Two-thirds of the vehicles from our plant in Tuscaloosa, Alabama, are exported to 150 countries worldwide. We therefore contribute to a more balanced trade balance for the USA. We believe this should be taken into account in the negotiations.' The team at Spartanburg that helped make the seven millionth BMW a reality. — Source: BMW Ford CEO Jim Farley proposed a similar idea Källenius's idea of rewarding U.S. exports is roughly on the same wavelength as similar ideas proposed by other automotive CEOs. Previously, Ford CEO Jim Farley raised the idea that automakers like Ford should get credit for building cars in the United States that are shipped overseas for international consumption, noting that it is 'essential' that the federal government come up with policies that encourage manufacturers to build cars for export, adding that it exports nearly as many vehicles as its brings in. 'So many of the vehicles we build here are exported around the globe,' Farley said. 'Shouldn't we get credit for that?' Around the same time Farley made those comments, the export of some high-ticket models to China, including the F-150 Raptor, Mustang, Bronco, and Lincoln Navigator, was halted due to retaliatory tariffs as high as 150% on imported vehicles. Final thoughts For what it's worth, German automakers like Volkswagen, BMW, and Mercedes-Benz have a lot of leverage for a potential U.S. tariff deal, especially if they propose that German automakers receive credits based on the number of vehicles they produce in the United States. These aren't small potatoes, either. BMW alone manufactures some of its highest-volume models, such as the BMW X3, X4, X5, X6, X7, and XM, at its Spartanburg, South Carolina, plant, which serves both U.S. and international markets. According to data from the U.S. Department of Commerce, BMW is the largest automotive exporter by value in the U.S., shipping 'more than $10 billion' of cars in 2024. American hands assemble these cars, no matter the badge or its supposed country of origin. About the Author James Ochoa View Profile
