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Irish Times
a day ago
- Business
- Irish Times
The good, the bad and the ugly of the EU's budget draft
Earlier this month, the European Commission fired the starting gun on a 30-month marathon negotiation on the EU 's next seven-year budget. Brussels has proposed a nearly €2 trillion common spending pot that it claims faces up to Europe's 'new and emerging challenges'. Does it? First, the good. Brussels has taken some steps towards reallocating funds to today's priorities: infrastructure, defence, security, research and energy and industrial resilience. The exact numbers are already the subject of fights, even inside the commission itself. But just as important is the lack of controversy around the methodological changes to the budget. The commission rolls agricultural subsidie s and transfers to poorer regions into new national plans, to be proposed by governments, approved by the EU and checked against delivery to release funding. This marks a big shift, modelled on the post-pandemic recovery fund. Grumbles can be heard about insufficient funding and a power grab by national governments from local officials. But not about the basic principle of cash in return for demonstrable, mutually agreed reforms. READ MORE That is a quiet revolution from the habit of simply sending cheques to farmers and local governments; the most remarkable thing about the budget draft was the least remarked upon. Another change seemingly received without objection is the streamlining of the budget into fewer funding streams. This simplification should speed up disbursement and ease planning and co-ordination. Next, the bad. The commission has reprioritised its budget with a view to the changing geopolitical landscape. The commission's new spending priorities show it has listened to warnings in the Enrico Letta and Mario Draghi reports. But it has missed the opportunity to integrate budget politics more closely with strategic calls to unify the single market and boost productivity. A case in point is the ill-judged idea of lump-sum taxes on EU companies with large turnover. Brussels is right to seek new revenue sources. But any business levy should be designed within its planned pan-EU corporate code. Getting a share of the corporate tax base from companies choosing this regime is better than slapping a new tax on top of existing ones. The budget also fails to address the need for more equity funding for companies in key strategic sectors, set out convincingly in a report by the European Policy Centre (EPC) that proposes an off-budget instrument resembling an EU sovereign wealth fund making equity investments in the bloc. This is a good idea. So is the EPC's call to securitise EU-funded common European industrial and infrastructure projects. Both would boost the growth of badly needed pan-EU capital markets. A third weakness is the commission's lack of attention to providing investors with pan-EU safe benchmark securities. The budget draft does nothing to promote this. More common debt is a politically explosive idea. But it need not be raised for subsidising poorer members; a stronger justification is to fund an EU sovereign wealth fund. [ Every Irish person contributes €53.20 a month to the EU. We should be prepared to pay more Opens in new window ] Finally, the ugly. Brussels commits the statistical sin of using nominal numbers, which mainly reflect inflation, to claim a large increase in the budget. The relevant measure of resources is the share of gross national income (GNI) the budget allocates to common priorities. The last budget came to a little over 1 per cent of EU GNI. Adding in the special post-pandemic debt-financed fund, the total came to 1.7 per cent. The new draft budget is for 1.26 per cent of GNI, but after deducting the money needed to pay down common debts, it's a mere 1.15 per cent – an amount that will be further whittled down in talks. A proposal to spend a third less of an already tiny share of resources makes a mockery of all the strategic evangelising. This is a budget that ensures continued geopolitical marginalisation. As the great American philosophers Ralph Waldo Emerson and Omar Little have argued, if you 'come at the king, you best not miss'. If the EU wants to hold its own in world affairs, it must give itself the resources for it. Getting more now will be much harder after its initial lowballing. Success is more likely for off-budget ideas such as the EPC's, common borrowing for a sovereign wealth fund and a delay to paying down existing debt to free up funds. Both EU and national leaders accept they face unprecedented, perhaps existential, risks. They must now admit those cannot be addressed on the cheap. – Copyright The Financial Times Limited 2025
Euractiv
23-07-2025
- Business
- Euractiv
UK competition watchdog eyes special abuse control regime for Apple, Google
The UK's Competition and Markets Authority (CMA) has announced a preliminary decision to designate mobile platform giants Apple and Google with "strategic market status", meaning they would become subject to special abuse controls by the UK regulator – in a similar approach to the EU's Digital Markets Act (DMA). On Wednesday, the CMA announced that it's proposing to designate the two tech giants – saying that it had found 90-100% of mobile devices in the UK run on either Apple- or Google-owned mobile platforms, making the pair "an effective duopoly". A "strategic market status" designation on Apple and Google would unlock bespoke powers for the CMA's Digital Markets Unit to tackle platform-specific competition risks, with the wider goal of boosting the UK's app economy. The CMA has a number of concerns about Apple and Google's platforms, including restrictions placed on app developers' ability to steer consumers to offers outside the tech giants' own app stores – an issue which led the EU's executive to slap the iPhone-maker with a €500 million fine under the bloc's DMA earlier this year. It also said it wants to investigate restrictions the two companies' platforms put on developers' access to "features and functionality". Under the EU's DMA, Apple and Google's app stores are both designated as "core platform services" – meaning the app marketplaces are subject to an up-front list of obligations and prohibitions, such the DMA's ban on gatekeepers' self-preferencing. Apple has already been fined in relation to anti-steering under the DMA. Since March it has also been in talks with the Commission about implementing interoperability features to comply with the pan-EU law. Google, meanwhile, was also found by the Commission to have violated the DMA's rules on steering in relation to its Play Store – although it has yet to receive a fine. "Time is of the essence: as competition agencies and courts globally take action in these markets, it's essential the UK doesn't fall behind," said Sarah Cardell, Chief Executive of the CMA, in a statement. Also today, the UK watchdog published separate roadmaps for actions the two mobile giants could take to improve competition – and avoid the risk of future enforcement – outlining measures focused on areas including interoperability, AI services, and consumer choice. A final decision by the CMA on whether to designate Apple and Google with "strategic market status" will be taken by 22 October. (nl)
Business Times
05-05-2025
- Business
- Business Times
Trump has created a chance for the euro to rival the dollar
IT HAS long been the European Union's aspiration that the euro would rival the US dollar for global dominance, or at least for monetary sovereignty at home. Now, the self-sabotage of Donald Trump's Washington is a golden opportunity to realise the dream – if European leaders can overcome their political timidity over doing what it takes to grasp it. True, as in many areas of economic policy, it is unclear what the Trump administration's goals are for the greenback. Some of its members think the dollar's attraction – the 'exorbitant privilege' of guaranteed cheap credit from the rest of the world – is in fact an exorbitant burden that, by driving up the currency, depresses American manufacturing. Others, notably Treasury Secretary Scott Bessent, insist the US is committed to a strong dollar policy. There is also a push to corner the nascent market for cross-border payments via dollar stablecoins, creating another captive source of US Treasury holdings. The administration may not have made its mind up, but investors are increasingly making up theirs. Trump's 'Liberation Day' tariffs were followed by a highly unusual market reaction to a rise in global risk: a sell-off in both US Treasuries and in the dollar more broadly. At least for now, global money managers are no longer treating the greenback as the ultimate haven. Confidence in the dollar has taken a knock from Trump's tariff policy, but also from his team's airing of bizarre financial policy ideas. These include forced conversion of Treasury bonds or charging fees for the privilege of lending to the US government. The administration's aggression against the rule of law makes all legal claims uncertain, including financial ones. Can European leaders hear the markets' scream for help in the form of an alternative asset? If ever the time was ripe for a 'Hamiltonian moment', in which Eurozone countries issued a large and permanent stock of common debt to gradually replace the fragmented landscape of national sovereign bonds, this is it. Global investors would lap up a large-scale and liquid eurozone safe asset. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The politics for this, needless to say, are not in place. But simpler steps could be taken in short order to exploit US errors as a European opportunity. First, put off the scheduled paying down of pan-EU debt taken out to bankroll the post-pandemic 'Next Generation EU' fund. This debt stock, meant to decline over the 30 years to 2058, should be rolled over indefinitely instead. Second, consolidate the various stocks of debt already issued with the joint backing of EU member states. A single issuer and set of bonds could over time replace the jigsaw of national bonds, as well as cover all new ones, such as those for the mooted pooling of 150 billion euros (S$219.2 billion) in defence spending. Third, the EU could pre-fund future spending. Over the next two years, member states will negotiate a seven-year budget of well over one trillion euros. Borrowing ahead of time could be calibrated to maintain a stable, large total EU debt stock. Such initiatives would help satisfy demand for holding large amounts safely in euros and give assurance that the EU was committed to a deep and liquid euro asset market for the long run. That should lower European borrowing costs just as member states gear up for more investment in defence and industrial policy. The change in relative safety of the dollar and euro assets is not the only driver favouring the latter. Historically, global businesses' choice of invoicing and funding currencies in international trade have preceded countries' choice of reserves denominations. Ask yourself this: if you stopped trading with the US, would you need to hold its currency? And if Trump eliminates everyone's bilateral surplus with the US, how would they keep accumulating net claims on US assets? In other words, the global trade outlook matters for currency questions, too. Europe can use its agenda to deepen trade with the rest of the world to boost the euro's attractiveness. That requires not just taking the agenda seriously – passing the trade deal with the Mercosur bloc, for example. It also demands offering financial tools to encourage trading in euros, from swap lines with trade partners to a digital currency designed to work for cross-border corporate trade. Unifying stock markets and a pan-EU so-called '28th regime' of corporate law should help boost risk capital in euros. These measures are mostly well known, but political impetus has been lacking. What is needed is for leaders to see their connection to the geopolitical goal of autonomy from US caprice, to understand the urgency today. FINANCIAL TIMES
