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‘Austerity is inevitably painful’: How Michael Gove justifies his politics | Radical Thinking with Aditya Chakrabortty

For more than three decades, Michael Gove has been a leading figure in British Conservatism. As a journalist, government minister and now editor of the Tory bible the Spectator, he has helped shape the right even as it has moved further rightwards. In the latest episode of Radical Thinking, Gove joins Aditya Chakrabortty to discuss the future of the right, his record on Brexit and austerity, and the Spectator’s position on Islam

Watch the full episode with Michael Gove here.

Aditya’s suggested reading:

To read the fruits of Michael Gove’s dalliance with the Marxism Today gang, look up his essay in a 1998 collection called The Moderniser’s Dilemma: Radical Politics in the Age of Blair

For a slalom ride through Michael Gove’s years in power, read The Demented Dalek by the historian Richard J Evans in the London Review of Books

To learn more on what’s become of the British right, there’s a Guardian column by Aditya

Phil Burton-Cartledge analyses in depth why the most successful political party is now failing in his book The Party’s Over: The Rise and Fall of the Conservatives from Thatcher to Sunak

Phil also writes a very good blog on British politics, which keeps a close eye on how each party is trying to marshall a coalition of voters. Here he is on Kemi Badenoch

Geoffrey Wheatcroft does an entertaining short narrative in Bloody Panico!:

or, Whatever Happened to The Tory Party

For more on the economics of the Cameron years, this paper is acute on how the Tories failed to move the UK away from being a country of renters towards a country of makers. Two of its authors will join us for a podcast later in the series.

And if you want to read how Brexit may have cost the UK 8% of GDP, there’s this paper based on data from the Bank of England

Finally, on the Spectator, read Nesrine Malik’s recent Guardian column

Why has Britain’s oldest political magazine become such a rabid cheerleader for Islamophobia?

Continue reading...

© Photograph: James Tindale/The Guardian

© Photograph: James Tindale/The Guardian

© Photograph: James Tindale/The Guardian

‘Austerity is inevitably painful’: How Michael Gove justifies his politics | Radical Thinking with Aditya Chakrabortty – podcast

For more than three decades, Michael Gove has been a leading figure in British Conservatism. As a journalist, government minister and now editor of the Tory bible, the Spectator, he has helped shape the right even as it has moved further rightwards. In the latest episode of Radical Thinking, Gove joins Aditya Chakrabortty to discuss the future of the right, his record on Brexit and austerity, and the Spectator’s position on Islam

Watch the full episode with Michael Gove here.

Aditya’s suggested reading:

To read the fruits of Michael Gove’s dalliance with the Marxism Today gang, look up his essay in a 1998 collection called The Moderniser’s Dilemma: Radical Politics in the Age of Blair

For slalom ride through Michael Gove’s years in power, read The Demented Dalek by the historian Richard J Evans in the London Review of Books

To learn more on what’s become of the British right, there’s a column by me for the Guardian

Just why the most successful political party is now failing is analysed in-depth by Phil Burton-Cartledge in his book The Party’s Over: The Rise and Fall of the Conservatives from Thatcher to Sunak

Phil also writes a very good blog on British politics, which keeps a close eye on how each party is trying to marshall a coalition of voters. Here he is on Kemi Badenoch

Geoffrey Wheatcroft does an entertaining short narrative in Bloody Panico!:

or, Whatever Happened to The Tory Party

For more on the economics of the Cameron years, this paper is acute on how the Tories failed to move the UK away from being a country of renters towards a country of makers. Two of its authors will join us for a podcast later in the series.

And if you want to read how Brexit may have cost the UK 8% of GDP, there’s this paper based on data from the Bank of England

Finally, on the Spectator read Nesrine Malik’s recent column in The Guardian

Why has Britain’s oldest political magazine become such a rabid cheerleader for Islamophobia?

Continue reading...

© Photograph: James Tindale/The Guardian

© Photograph: James Tindale/The Guardian

© Photograph: James Tindale/The Guardian

Putin Seizes More European Businesses as Moscow Expands Economic Retaliation Against EU

16 October 2026 at 16:47

Russia has placed five foreign-owned businesses under compulsory administration, including Belgian manufacturer Ontex and French flooring group Tarkett. The latest seizures deepen the confrontation over sanctions, frozen Russian assets and the future of European investment in Russia.

Russian President Vladimir Putin has ordered the transfer of five Western-owned businesses into compulsory Russian management, extending a campaign of asset seizures targeting European companies that continued operating in Russia after the full-scale invasion of Ukraine.

The decree, signed on 15 October, affects businesses with combined annual revenues exceeding 53 billion roubles, approximately €530 million. They include French flooring manufacturer Tarkett, Belgian hygiene products group Ontex, German packaging producer Menshen, Kappa Rus and Eviosys Packaging Kuban, now linked to American group Sonoco.

Under Presidential Decree No. 738, operational control has been transferred to Centre Capital, a little-known Moscow company established in February 2026 with registered share capital of just 10,000 roubles.

The decision follows similar interventions against Nestlé, Auchan, FM Logistic and Metro in September. Together, the measures demonstrate how Moscow is using foreign-owned businesses as instruments of economic retaliation against countries supporting Ukraine.

Foreign businesses placed under Russian control

Centre Capital is headed by Marat Mirkhaydarov, a former senior official in Russia’s Zabaykalsky region who reportedly served with the Akhmat military formation during Russia’s war against Ukraine.

The scale of the companies placed under his management contrasts sharply with the financial standing of the administrator.

Tarkett’s Russian operations generated approximately 19.3 billion roubles in revenue during 2025, while Kappa Rus recorded 16.5 billion roubles and Ontex RU another 10.3 billion. Eviosys Packaging Kuban and Menshen Packaging CIS reported approximately 6.1 billion and 1.4 billion roubles respectively.

The decree does not formally transfer ownership of the companies to Centre Capital. It does, however, remove the foreign shareholders’ effective control over management, operations and commercial decisions.

For Belgian manufacturer Ontex, the consequences are immediate.

In an official statement issued on 16 October, the Aalst-based company confirmed that a government-appointed administrator had assumed operational control of its Russian subsidiary.

Ontex Russia employs approximately 350 people, operates a manufacturing facility in Noginsk and maintains a sales office in Moscow. The subsidiary accounts for around five per cent of the group’s total revenue and between seven and eight per cent of adjusted EBITDA.

The company said it was examining measures to protect its assets and maintain business continuity.

Tarkett likewise confirmed that it was losing effective control of its Russian operations.

A mechanism established in 2023

The legal framework for such interventions dates to April 2023, when Putin introduced Decree No. 302, allowing the Russian authorities to place assets associated with countries designated as unfriendly under temporary external management.

The appointed administrator can exercise extensive ownership-related powers, although the formal right to dispose of the assets remains excluded.

Crucially, the arrangement can be terminated only by presidential decision. There is no automatic deadline for returning operational control to the original owners.

Moscow maintains that the measures are reversible. Nevertheless, the loss of management authority raises questions about whether businesses could eventually be returned with their financial position, organisational structure and commercial value intact.

The latest decree extends the process already documented by EU Today following the September takeover of Nestlé and Auchan’s Russian operations.

The Kremlin’s approach also serves domestic economic objectives. Keeping factories, retail networks and distribution facilities operating under Russian management helps preserve employment, production capacity and established supply chains.

At the same time, appointing Russian administrators allows the authorities to exercise greater influence over businesses originally developed through foreign capital, technology and expertise.

European companies caught in sanctions confrontation

Kremlin spokesman Dmitry Peskov has explicitly linked the seizures to the nationality of the affected companies and the policies of their governments.

He accused European states of participating in the unlawful seizure of Russian property through sanctions and financial restrictions.

Moscow’s argument centres partly on approximately €210 billion in Russian sovereign assets immobilised in the European Union, most of them held through Belgium-based securities depository Euroclear.

The European Union has used extraordinary revenues generated by those assets to support Ukraine, while further proposals involving the underlying funds remain subject to legal and political debate.

Belgium has been particularly concerned about potential financial exposure and legal claims. As EU Today reported in September, a Belgian Council of State judgment raised additional questions about the administrative procedures governing certain frozen assets.

The dispute has also moved into the European courts, with the Bank of Russia challenging EU measures intended to protect Euroclear against the enforcement of Russian judgments.

Moscow’s treatment of European businesses adds another dimension to this confrontation. By retaining control over foreign-owned industrial and commercial assets, Russia possesses a means of exerting pressure on companies whose governments support sanctions and military assistance to Ukraine.

The implications are particularly serious for Western banks that still maintain substantial Russian operations.

Austria’s Raiffeisen Bank International and Italy’s UniCredit remain exposed to Russia through local subsidiaries. Any extension of compulsory administration to financial institutions could create additional difficulties involving deposits, capital and banking supervision.

The cost of remaining in Russia

The seizures also expose the financial risks faced by Western companies that delayed their withdrawal after February 2022.

Many initially sought to protect their investments, employees and commercial infrastructure. Others reduced operations but retained ownership, expecting that conditions might eventually permit an orderly sale or renewed business activity.

Russian restrictions have progressively complicated that calculation, requiring foreign investors from designated countries to accept substantial discounts on asset sales and obtain official approval for transactions.

Companies remaining in the country now face the additional possibility that the government will appoint administrators without their consent.

The consequences extend beyond the businesses immediately affected. Russia is establishing a precedent under which foreign investment can remain legally owned by its original shareholders while its economic benefits and operational management are placed beyond their control.

For European governments, the latest decree illustrates the increasing connection between commercial interests and geopolitical decisions.

The Kremlin has demonstrated that sanctions imposed over its invasion of Ukraine can be answered not only through diplomatic or financial measures, but also through direct intervention in European-owned businesses operating on Russian territory.

Any eventual negotiation over sanctions relief and the restoration of economic relations will consequently have to address the status of these assets, the rights of their original shareholders and the question of compensation.

Until then, Western companies remaining in Russia face an investment environment in which the ultimate authority over their businesses rests increasingly with the Kremlin rather than their shareholders.

British food and drink exports to EU collapse by more than a third since Brexit

16 October 2026 at 13:34

NFU analysis of official data shows falls in exports to UK’s largest trading partner since 2019 include 70% for sugar and 74% for egg products

Exports of British food and drink to the EU have collapsed by more than a third since Brexit with eggs, chicken and potato producers badly hit, new figures show.

Analysis by the National Farmers’ Union (NFU) of HMRC data shows a sharp fall in exports in the year to July compared with the same period in 2019, with sugar dropping the most, down 70%.

Continue reading...

© Photograph: David Levene/The Guardian

© Photograph: David Levene/The Guardian

© Photograph: David Levene/The Guardian

The inflation conflagration is back and here to stay

16 October 2026 at 06:11

Two years ago, central bankers on three continents all but declared victory over inflation. Markets took them at their word, and plenty of investors built their portfolios on the assumption that the price surge of 2022 was behind us. That assumption was wrong, and the consequences are now showing up in almost every major economy […]

The post The inflation conflagration is back and here to stay appeared first on Asia Times.

We Got Hot and Heavy With Meta’s Muse—and Baffled by Apple’s HomeView

15 October 2026 at 22:18
This week on “Uncanny Valley,” we dive into an unexpected Muse feature, shadowy spending from the largest pro-AI super PAC, and men’s tendency to lie about how much they know about AI.

Buying Moscow from Washington: Europe has lost the energy war

By: A A
15 October 2026 at 10:00

The simplest test for recognizing a collective pathology is to ask each of its members whether they would choose on their own to do what the group is doing.

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Contact us: info@strategic-culture.su

A pipe and an ocean

A gas pipeline is a pipe. It connects a gas field to a consumer, crosses a few borders, and, once built, transports energy at a very low cost per unit. A supply chain that starts at Russian gas fields, goes through an American contract, crosses the Atlantic on a LNG tanker, and arrives at a European regasification terminal does the same thing but with more steps, more markups, and more friction. No engineer, no accountant, no student of economic geography would choose the second option if they could choose the first. And yet that is where Europe seems headed: according to recent reports, Russian energy could return to European markets with an American stamp on it and a higher price tag attached.

I argue that this situation cannot be explained by Washington’s cunning—which certainly exists—nor by Brussels’ weakness—which certainly exists as well. It stems from a cognitive distortion shared by governments, institutions, and much of the public, which has rendered a geographical truism invisible. I call it the pathology of the absurd: the state in which a system continues to follow its own internal rules even as they produce an outcome that none of its individual components, taken on its own, would ever have wanted. The technical term for this mechanism is collective bias—that is, an error in judgment that does not stem from the stupidity of individuals but from the way a group convinces, rewards, and punishes itself.

How to lose a war without fighting it

A methodological clarification before proceeding. No official documents have been released yet (a treaty, an MoU, nothing public); what has been documented is scant and carries almost symbolic weight. Trump announced that Russia will supply the U.S. and global markets with over 300,000 metric tons of diesel immediately, another 500,000 in November, and one million shortly thereafter. Converted to barrels, that’s about 5.9 million in total—one-fifth of global consumption in a single day—and just over a week’s worth of Russian exports at last year’s rate. As a market transaction, it is insignificant, but as a political signal, it is quite the opposite.

Because politically speaking, the implications are much deeper. Moscow has lifted the ban on diesel exports that had been in place since July. Trump stated that the time has come for Ukraine to have a new president and proclaimed an “energy truce” effective immediately. According to an account by a U.S. official, the peace plan being developed by the White House and several European capitals would freeze the front along the current line of control and provide security guarantees comparable to NATO’s Article 5, a reconstruction mechanism entrusted to the World Bank and BlackRock, and a pipeline to bring Russian gas and oil back to Europe, with profits split between Moscow and Kyiv. Washington, meanwhile, is reported to have suggested suspending intelligence sharing and the PURL mechanism if Kyiv continues to strike Russian refineries.

Zelensky stated that the announcement of the truce was news to him and that Kyiv was awaiting details. Lavrov rejected the idea of a pause; Peskov spoke of ongoing contacts. If we leave it to the “theologians of journalism” to debate whether the chicken or the egg came first, we can focus on what lies behind the facts—namely, that Russian energy will return to Europe through a framework negotiated by Washington, which is a likely prospect in the medium term, with moderate confidence regarding the trajectory and low confidence regarding the details. And, it must be said, anyone reading these pages as the chronicle of a fait accompli is misreading them.

By “energy war,” we mean the contest over who sets the price, the route, and the rules governing a continent’s energy flows. In this contest, Europe set out in 2022 convinced it was fighting a moral battle; it cut off supplies from Russia, presenting the decision first as a necessary sacrifice, then as a strategic victory. The assessment after four years tells a different story: Europe has lost its cheapest and closest supply source, has rebuilt its dependence elsewhere, and the United States—which in the meantime had become the continent’s main supplier of liquefied natural gas—has gained both influence and profit margins as a result. When the European Parliament decides that, as of January 1, 2027, even the last remaining shares of Russian energy will be phased out of the Union’s energy mix, the circle will be complete, and the phase-out will be total—just as the other side of the Atlantic prepares to do business with Moscow.

In the tradition of classical geopolitics, this issue has an age-old name. Europe is the western peninsula of the vast Eurasian continent, and its natural logic of supply is continental: pipelines, long-term contracts, and interdependence with those to the east. The Atlantic logic is maritime, consisting of ships, terminals, and spot prices. Mackinder and Spykman, though by different paths, had understood that whoever separates the two systems profits from both sides of the divide. One need not adopt the entire theoretical framework of the Eurasianist school to recognize that geography does not negotiate here, and that for four years European institutions have acted as if it could.

The intermediary model

According to the model that has emerged so far, the United States would acquire Russian energy assets—starting with Lukoil’s foreign division—through an initial payment and a share of the profits, and could purchase, on competitive terms, the hydrocarbons that Europe no longer buys, in order to resell them to Europeans at full price. Washington’s interest is explicit and evident even in the most cautious sources. Trump faces midterm elections, an energy crisis triggered by the aggression against Iran, rising diesel prices, and low approval ratings. On the other hand, the American consumer has no reason to distinguish between Russian diesel and any other diesel.

What matters is the role assigned to Europe. Officials from the United Kingdom, France, and Germany were present at the talks in Florida. Their task is to ensure post-war security, finance reconstruction through instruments designed elsewhere, and, in the long term, open their own energy markets to a Russia that has, in the meantime, forged a direct relationship with Washington. They are the guarantors and the clients; they do not appear among the beneficiaries of the profits. When the diesel agreement was announced, the Europeans expressed irritation yet remained at the table—which is a good summary of where they stand.

And there is also a strange, biting irony in all of this: Nord Stream—which Washington did not want built and which was sabotaged—would be reactivated under a draft U.S. agreement, and the gas flows that Europe lost as a result of that sabotage would once again pass through U.S. intermediaries. If the pipeline were reactivated, Europe would pay to get back what it already had, at a price set by those who neither produce nor consume it. Pure madness.

Why it’s a pathology, not a mistake

We are facing a collective cognitive bias that has evolved to the point of becoming pathological. And it is not a simple “error in judgment,” since an error is corrected when it is discovered, whereas a pathology persists because it is sustained by the very structures that should be curing it. I identify four such structures, each of which is rational when viewed from within.

The first is moralization. Sanctions began as a tool and have become an identity. Anyone who today proposed reopening direct channels with Moscow would be seen as a traitor, not as an accountant. The accounting objection, however well-founded, has no place in the debate. The second is sunk costs: after years of sacrifices imposed on citizens and businesses, admitting that the plan was flawed costs more—in political terms—than continuing to pay the consequences. The third is the delegation of rationality. If Washington is the one to reopen the channel, no European government will have to admit it was wrong. The premium that Europe would pay to the intermediary is, in essence, the price of not having to admit the mistake. It is a bill that leaders present to their constituents under the heading of “security.”

The fourth is the institutional asymmetry between those who decide and those who pay. A parliamentary vote on sanctions generates immediate visibility for those who cast it, while the cost is spread across millions of utility bills and thousands of industrial plants, faceless and without a specific date. In such a system, the most convenient choice for any decision-maker is almost always the loudest one. There’s no need to hypothesize about a hidden agenda or secret plan to explain the outcome. Washington’s interest is stated openly and perfectly clear; Europe’s blindness is structural. These are two phenomena of different natures that have ended up interlocking.

The most serious criticism of this interpretation comes from countries bordering Russia. For Warsaw, Riga, or Vilnius, dependence on Moscow’s energy is not a matter of price but of exposure. The year 2022 demonstrated that an energy supply can be cut off, and the extra cost paid to diversify sources is an insurance premium like any other—or at least that is what the EU has tried to convince the countries of Northern Europe, spinning the fairy tale of a better world that would soon arrive, achieved through military victory alongside Kyiv. A fascinating fairy tale, to be sure, but one that holds up only to a certain extent. Insurance makes sense when the premium is limited and when the insurer does not profit from the occurrence of the loss. Here, the insurer is also the main beneficiary of the rift between Europe and Russia, as evidenced by the very fact that it is about to mend that rift when it suits its interests. Furthermore, dependence on the United States is a form of dependence like any other. The threats to suspend intelligence sharing and the PURL mechanism with Kyiv—if confirmed—show that Washington makes its available supplies contingent on its current political objectives.

Anyone who thinks that using energy as leverage applies only to Moscow has a selective memory. If Europe were to re-enter the Russian market through American intermediation, it would compound its vulnerabilities: it would be dependent on Russian energy and on the American infrastructure that delivers it. In other words, this objection justifies diversification, but it does not justify the decision to never negotiate on its own.

Scenarios and indicators

We can discern three plausible developments, with a 6- to 12-month timeframe—assuming we manage to get through this winter.

The first is the consolidation of U.S. mediation: sanctions eased in phases, Russian assets acquired by U.S. and Gulf operators, and energy flows returning to Europe under contracts that Europe did not draft. This is the most optimistic scenario, though with only moderate confidence. The second is the failure of the agreement, with Moscow refusing a ceasefire, Kyiv continuing to strike refineries, and Washington shifting its focus elsewhere; Europe would be left with high prices and no supply channels. This is a possible outcome, roughly equally likely. The third is a direct overture from Brussels or certain capitals toward Moscow—highly unlikely in the short term, for the political and psychological reasons already outlined.

Four indicators will help determine which of these scenarios unfolds: the text of any agreement setting the sanctions timeline; the name of the party holding the contracts for Lukoil’s international assets; the status of Nord Stream, if and when it is included in an official draft; The outcome of the U.S. midterm elections, which weigh on the entire situation more than Brussels cares to admit.

Added to these is a factor of uncertainty regarding the U.S. counterpart: the energy agreement does not resolve the structural weaknesses of the U.S. economy, ranging from public debt to rising interest rates to debt-financed artificial intelligence companies. A partner with such finances—and such a packed political calendar—is a mediator who offers little guarantee of longevity.

The simplest test for recognizing a collective pathology is to ask each of its members whether they would choose on their own to do what the group is doing. No European government official responsible for energy policy, if questioned in private, would say that buying Russian energy in Washington is the best solution. They would, it seems, provided that others are the ones making the decision.

The true price of a pipeline is the cost of the pipeline itself.

Everything else that is added—and that Europe would pay—reflects the cost of a choice that has never been made openly.

So far, no one has asked that question on the floor of the chamber.

Mercedes Chief Warns EU Against Excluding Britain from ‘Made in Europe’ Industrial Rules

14 October 2026 at 20:16

Mercedes-Benz chief executive Ola Källenius has warned that excluding British manufacturers from European industrial preference rules would damage automotive production on both sides of the Channel, increasing pressure on Brussels ahead of negotiations over its proposed Industrial Accelerator Act.

The head of Mercedes-Benz has warned that excluding British manufacturers from the European Union’s proposed industrial preference rules would damage the competitiveness of carmakers across Europe, challenging Brussels over legislation intended to protect European production from growing international competition.

Ola Källenius, chief executive of Mercedes-Benz and president of the European Automobile Manufacturers’ Association (ACEA), criticised the prospect of restricting British participation in the forthcoming “Made in Europe” framework during discussions in Brussels on Wednesday, 14 October.

His intervention comes as European governments negotiate the Industrial Accelerator Act, which would introduce European-content requirements affecting public procurement and certain forms of industrial support.

The proposed legislation is intended to strengthen manufacturing within the EU, but its treatment of production in neighbouring countries has become contentious, particularly in an automotive industry whose factories and suppliers operate across national borders.

European production extends beyond the EU

British manufacturing remains closely integrated with continental European automotive production despite the United Kingdom’s departure from the single market.

Components manufactured in Britain are incorporated into vehicles assembled in EU member states, while British factories depend on engines, batteries, electronics and other parts produced in continental Europe.

The value of this integrated manufacturing system depends on companies being able to source components across borders without unnecessary restrictions.

Källenius warned that excluding the UK from the proposed rules would weaken manufacturers operating on both sides of the Channel.

His position reflects industry concerns that a narrowly defined European-content regime could impose additional costs on companies already facing pressure from Chinese competition, slowing demand and substantial investment requirements.

As EU Today reported in September, British Prime Minister Andy Burnham has been pressing Brussels to recognise the UK as a trusted industrial partner under the emerging framework.

Germany has also supported a broader approach that would allow selected trading partners to qualify under European-content rules where reciprocal conditions are met.

France has favoured stronger preferences for production within the EU itself, reflecting differences among member states over how far European industrial policy should extend beyond the Union’s borders.

A dispute over industrial sovereignty

The Industrial Accelerator Act proposed by the European Commission is intended to strengthen Europe’s manufacturing base and support production in strategically important sectors.

Its provisions address public procurement and industrial incentives affecting products including vehicles, steel, aluminium and clean technologies.

The Commission wants European public spending to support local industrial capacity rather than reinforce dependence on imports from major international competitors.

China has become the principal focus of those concerns because of its expanding manufacturing capacity, particularly in electric vehicles and batteries.

However, measures designed to counter Chinese industrial competition could also affect established trading partners whose manufacturers form part of European supply chains.

The United Kingdom, Norway, Switzerland and Turkey occupy different legal positions in their economic relations with the EU, but all maintain important industrial connections with member states.

An approach that treats their production as equivalent to imports from countries with substantially different market conditions could require European companies to reorganise existing supplier relationships.

For manufacturers, replacing a supplier may involve more than simply ordering components from another factory. Production standards, technical certification, logistics and long-term investment arrangements can make changes expensive and difficult.

Industry demands regulatory certainty

Following an ACEA board meeting on Wednesday, European manufacturers called for faster progress on the wider automotive legislative package.

In its 14 October statement, ACEA urged EU institutions to advance negotiations so that the package could be finalised early next year.

The association argues that manufacturers require a predictable regulatory framework to plan investments in electric vehicles, production facilities and new technologies.

Källenius linked the industry’s transition towards zero-emission mobility with the need to preserve employment and strengthen economic security.

European manufacturers are simultaneously investing heavily in electrification while competing against Chinese companies with established battery supply chains and significant production capacity.

The resulting financial pressures are particularly serious for manufacturers that must develop new vehicle platforms while maintaining existing factories and dealer networks.

Additional restrictions on component sourcing could complicate those decisions at a time when companies are seeking to reduce costs.

Britain refuses to follow EU tariffs automatically

The dispute has acquired a further dimension following remarks by British Business Secretary Jonathan Reynolds.

Speaking on Wednesday, Reynolds indicated that Britain would not automatically follow the European Union in imposing tariffs on Chinese vehicles.

The UK government maintains that trade measures must be determined according to British economic interests rather than adopted simply to align with Brussels.

That position complicates London’s attempt to secure favourable treatment under European industrial rules.

EU policymakers have argued that closer alignment on trade defences could support Britain’s claim to be treated as a trusted partner.

British ministers, however, must consider whether restrictions on Chinese imports would benefit domestic manufacturers and consumers.

The disagreement will form part of the broader economic relationship being discussed ahead of the next UK–EU summit, scheduled for 20 November.

The wider implications for EU–UK relations

The automotive dispute follows earlier negotiations over British participation in European defence procurement and other industrial programmes.

In both cases, London wants access to initiatives designed to strengthen European production while remaining outside the EU’s institutional framework.

Brussels must determine how far preferential treatment can extend to non-member countries without undermining the objectives of its industrial policy.

The Commission’s proposals have already revealed disagreements between governments favouring a tightly defined European manufacturing base and those seeking to preserve wider commercial partnerships.

Källenius’s intervention strengthens the argument that industrial protection cannot be considered separately from the supply chains on which European manufacturers depend.

The final legislation will influence investment decisions, procurement arrangements and the position of British suppliers within the continental automotive industry.

The outcome will also provide an indication of how far the EU is prepared to accommodate its closest trading partners as it attempts to strengthen European manufacturing against growing competition from China.

Germany Protects Deutsche Börse as EU Ministers Agree Reduced Financial Supervision Reform

14 October 2026 at 20:05

EU finance ministers have approved a compromise that would expand the European Securities and Markets Authority’s powers while exempting some major trading venues from centralised oversight. The agreement reflects continuing resistance to transferring financial supervision from national authorities to Brussels.

European Union finance ministers have reached an agreement to expand centralised supervision of financial markets, but Germany has secured provisions allowing important parts of Deutsche Börse to remain under national oversight, substantially narrowing the European Commission’s original reform proposals.

The compromise, agreed at a meeting in Luxembourg on 9 October, would transfer responsibility for supervising selected trading venues, clearing houses and securities settlement institutions to the European Securities and Markets Authority (ESMA).

However, the agreement introduces exemptions and thresholds that reduce the number of institutions automatically subject to direct European supervision.

The result is a significant political compromise between governments seeking deeper financial integration and those reluctant to surrender oversight of nationally important market operators.

Berlin secures its exemption

The most contentious element of the negotiations concerned Deutsche Börse, the German financial-market group that operates the Frankfurt stock exchange and provides trading, clearing and other financial infrastructure services.

Germany opposed arrangements that would place all major market operators under direct ESMA supervision, arguing that institutions with predominantly domestic activities should continue to be regulated nationally.

The agreed compromise refines the criteria for determining which trading venues qualify for centralised oversight.

These conditions allow certain Deutsche Börse operations to remain outside the new supervisory regime.

The exemption had already become a point of contention during negotiations among European governments.

As EU Today reported in June, Berlin had sought to protect Deutsche Börse from mandatory European supervision despite Germany’s broader support for integrating EU capital markets.

The October agreement formalises a narrower approach within the Council’s negotiating position, although the legislation remains subject to approval by the European Parliament.

Europe’s fragmented financial markets

The European Commission has repeatedly argued that fragmented national supervision weakens the EU’s ability to compete with financial markets in the United States.

Although the Union operates a single market, many financial institutions continue to face differing regulatory interpretations, procedures and supervisory relationships across member states.

These differences can increase operating costs and discourage financial businesses from expanding across borders.

The Market Integration and Supervision Package is intended to simplify those arrangements and strengthen common oversight of financial infrastructure with significant cross-border activity.

Under the Council’s position, ESMA would assume direct supervision of selected trading platforms and institutions involved in clearing and securities settlement.

Such institutions perform essential functions in financial markets, including managing transactions, transferring securities and controlling risks between counterparties.

Differences in supervisory arrangements can complicate the operation of financial services that increasingly function across national borders.

The Commission argues that greater consistency would allow European capital to move more efficiently between member states and provide businesses with improved access to investment.

Compromise reduces original ambitions

The Commission’s original approach envisaged broader centralisation of supervisory responsibilities.

The Council agreement of 9 October introduces more restrictive criteria governing the institutions that would fall under ESMA’s direct authority.

In addition to the treatment of trading venues, ministers agreed that direct supervision of crypto-asset service providers should initially concentrate on businesses with the most significant cross-border operations.

The Council also supported changes to ESMA’s governance arrangements, including the creation of a full-time executive board.

The proposed board would strengthen the authority’s ability to make supervisory decisions independently of individual national regulators, while preserving mechanisms for cooperation with those authorities.

The compromise also introduces arrangements allowing national supervisors collectively to challenge certain decisions.

These provisions reflect concerns about concentrating regulatory powers within an institution that must oversee financial businesses operating under different national legal systems.

Why capital markets matter for European investment

The supervision reforms form part of the EU’s broader Savings and Investments Union initiative.

European policymakers want to increase the availability of private capital for companies investing in technology, defence, infrastructure and industrial development.

The Union has substantial household savings, but much of that money remains in bank deposits or is invested outside the European economy.

Companies seeking capital for expansion may consequently face higher financing costs or more limited investment opportunities than comparable businesses operating in larger and more integrated markets.

The Commission’s Savings and Investments Union programme seeks to improve access to finance and make cross-border investment more attractive.

Financial-market supervision represents only one element of that programme.

Differences in taxation, insolvency law, national investment products and corporate governance requirements also influence where investors allocate their money.

Nevertheless, regulators regard consistent supervision as an important condition for reducing fragmentation.

Parliament faces a political decision

The agreement reached by finance ministers does not conclude the legislative process.

The European Parliament must adopt its position before negotiations can determine the final provisions.

Parliamentary discussions could revisit the exemptions secured by Germany and the criteria determining which institutions fall under direct ESMA supervision.

The debate will expose differences over whether European financial integration should proceed through incremental reforms or a more substantial transfer of regulatory authority.

Governments supporting national exemptions argue that supervision should reflect the actual geographic scope of a company’s activities.

Supporters of broader European oversight contend that major trading businesses can influence financial markets beyond their home jurisdictions even when individual operations appear predominantly domestic.

The Deutsche Börse exemption has become a prominent example of the conflict between those positions.

Europe’s largest economies broadly support the objective of deeper capital markets, but remain divided over the institutional powers needed to achieve it.

The final legislation will determine whether the expanded responsibilities granted to ESMA are sufficient to reduce fragmentation or leave important parts of Europe’s financial infrastructure operating under substantially different national supervisory systems.

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