QUICK ANSWER What’s happening? European manufacturers are lobbying to preserve the EU’s Carbon Border Adjustment Mechanism (CBAM) after the European Commission proposed giving itself “discretionary powers” to suspend parts of the carbon tariff regime. Why it matters: For the first time, heavy industry is fighting to save a climate law, warning that proposed “kill switch” powers threaten €100 billion in decarbonization investments. What’s next: The industry revolt exposes fundamental tensions between climate ambition and regulatory flexibility as CBAM enters its critical implementation phase.

In an extraordinary reversal of traditional business-Brussels dynamics, European heavy industry is mounting a fierce campaign to protect the EU’s Carbon Border Adjustment Mechanism (CBAM) from being weakened by the very institution that created it. Manufacturers from fertilizers to cement are warning against introducing a kill switch into the just-launched CBAM scheme, as the European Commission seeks discretionary powers to suspend parts of the new measure.

The revolt rstarted earlier this year represents a pivotal moment in European climate policy, where industrial lobbying has shifted from opposing environmental regulations to defending them against regulatory uncertainty.

The “Kill Switch” Controversy

The EU executive wants to grant itself the power to exempt goods from the just-launched carbon border adjustment mechanism (CBAM), which requires importers of certain products to pay for planet-warming pollution emitted during the production process. Industry leaders describe this proposed flexibility as a “kill switch” that could undermine the entire framework.

The timing is particularly contentious. CBAM successfully entered into force on January 1, 2026, following a coordinated deployment across all EU Member States, integrating seamlessly with National Customs Import Systems. After three years of transitional reporting, companies finally face financial obligations under the system.

From 2026, EU importers need to buy and surrender CBAM certificates corresponding to the CO2 emissions embedded in their exports, priced in line with the EU’s carbon market, at around €70-€100 per tonne of CO2. This price mechanism creates genuine competitive pressure for cleaner production methods, which industry now wants to preserve.

Why Industry Wants Climate Rules Protected

The industrial defense of CBAM reflects a sophisticated understanding of competitive dynamics in global markets. European manufacturers have invested billions in decarbonization technologies based on CBAM’s promise of level playing field protection. The proposed exemption powers threaten this investment thesis.

Manufacturers worry the European Commission is undermining the bloc’s new carbon tariff regime, a key pillar of EU climate policy, warning the move is throwing investment plans into disarray and threatening much-needed decarbonization projects.

The industrial logic is clear: if CBAM can be suspended at political discretion, the regulatory certainty needed for long-term capital allocation disappears. This creates what economists call “regulatory risk premium” – the additional return demanded by investors to compensate for policy uncertainty.

Scope and Scale of CBAM’s Impact

CBAM initially applies to imports of certain goods whose production is carbon-intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. These sectors represent some of Europe’s most strategically important industrial capacity.

More than 12,000 economic operators submitted applications for CBAM authorization until January 7, 2026, with over 4,100 successfully obtaining authorized declarant status. In the mechanism’s first week alone, 10,483 Import Customs Declarations with CBAM goods were validated automatically, covering 1.66 million tonnes of goods.

The scale demonstrates CBAM’s immediate operational significance for European supply chain management and industrial competitiveness.

Investment Implications and Market Response

Industry’s defense of CBAM reflects deeper concerns about European competitiveness. The carbon border adjustment was designed to address “carbon leakage” – the relocation of production to countries with weaker climate policies. Without robust enforcement, European manufacturers fear renewed competitive disadvantages.

Countries like Brazil and Turkey have introduced domestic carbon-pricing policies in response to CBAM’s signals, while the United Kingdom is implementing its own Carbon Border Adjustment Mechanism starting in 2027. This global momentum toward carbon pricing validates the industrial argument that CBAM creates positive competitive dynamics.

The proposed exemption powers could undermine this momentum by signaling that EU climate policy lacks credible commitment. Financial markets price political risk into long-term investments, making regulatory consistency essential for industrial transformation.

Global Trade and Diplomatic Pressures

The “kill switch” proposal emerges amid intense international pressure on CBAM. The United States has pressured the bloc to withdraw the law, saying it will create massive trade barriers among transatlantic partners, while China, India, Russia, and South Africa have voiced opposition, calling it protectionism.

These diplomatic pressures likely influenced the Commission’s desire for flexibility mechanisms. However, industry argues that discretionary exemption powers would create worse outcomes than consistent enforcement, even amid trade tensions.

The industrial position reflects sophisticated game theory: credible commitment to CBAM enforcement encourages global decarbonization, while exemption possibilities incentivize continued lobbying against the mechanism.

Strategic Implications for European Business

The industry revolt over CBAM’s potential weakening signals a fundamental shift in European business-government relations around climate policy. Rather than reflexively opposing environmental regulations, leading industrial voices now recognize that consistent policy frameworks create competitive advantages over regulatory uncertainty.

This evolution reflects the maturation of European climate policy from cost burden to strategic asset. Companies that have invested in decarbonization now depend on policy consistency to realize returns on those investments.

Around €1.5 billion in CBAM revenues are expected by 2028, according to the Commission, creating substantial fiscal stakes alongside industrial interests. The proposed Temporary Decarbonisation Fund demonstrates how CBAM revenues could support further industrial transformation.

Looking Forward: Policy Credibility and Investment Confidence

The outcome of this industry-Commission standoff will determine CBAM’s credibility as a long-term policy framework. Industry’s unprecedented defense of climate regulation reflects genuine concerns about investment security in an uncertain global trade environment.

For European businesses navigating 2026’s economic landscape, CBAM’s integrity matters beyond climate considerations. The mechanism represents a test of EU institutional capacity to maintain consistent policy frameworks despite external pressures.

The resolution will likely influence broader debates about European industrial strategy and the role of regulatory certainty in maintaining competitive advantages. As global trade tensions intensify, European industry’s demand for policy consistency offers valuable insights into business priorities beyond immediate cost considerations.

The unprecedented spectacle of heavy industry lobbying to preserve climate regulation demonstrates how policy certainty has become as valuable as policy content in driving long-term business strategy.

The post EU Industry Revolts Over €100bn Carbon Tax — But the Real Story Is Different appeared first on European Business & Finance Magazine.

The European Commission announced its RESourceEU Action Plan in December, 2025, committing €3.5 billion in funding to critical raw material (CRM) projects. By Anna Dodd.

Citing risky dependencies on China, the European Commission aims to have Europe and its allies gaining control over CRM projects across the supply chain. China has long dominated the CRM pipeline – from extraction to processing to manufacturing of final products – which poses a risk to Europe’s energy transition goals. But, the Asian superpower has also shined in military security — a salient subject in recent years.

The past year saw China restrict exports on a range of critical minerals and rare earths — first in April 2025, and then again in October 2025. Although these restrictions were mainly implemented in response to United States tariffs under President Donald Trump, the impacts of Chinese restrictions were felt globally, including within the European Union. 

“[China’s] stronghold creates dependencies for the EU and other partners that are increasingly weaponised for geopolitical purposes,” reads a European Commission communication.

From raw materials to critical raw materials

There was a time when these resources were simply that — resources. When did raw materials like copper, rare earths, and magnesium gain the qualifier of “critical”? 

Henry Sanderson, a journalist and author specializing in clean energy and critical minerals, credited Trump as a major player in the global focus towards critical raw materials, dating back to 2017. 

Although the EU released its first raw materials list in 2011, “Trump really catalyzed this focus on critical minerals in his first administration,” said Sanderson, while in conversation with European Business Magazine. The author pointed to a 2017 executive order which called on the US Department of Commerce to develop a critical minerals federal strategy. 

“But it didn’t receive the global attention that it probably should have done at the time.”

Having campaigned under an anti-renewables stance, Trump’s focus on these materials rather stems from his long-held opposition to American reliance on foreign imports, according to Sanderson. But China’s retaliatory measures on U.S. tariffs last year is what has brought renewed attention to this subject more recently.

“I think that highlights some of the weaknesses of [western] democracies — they wait for issues to bubble up till they reach crisis mode, and then they take action,” he said. “But certainly for Trump, since his first time around, he’s been focused on critical minerals.” 

A renewed view on European security

According to the Commission, critical raw materials are essential for a number of geopolitical priorities: clean energy, digital transitions, food security, and defense and aerospace.

A legal expert specializing in corporate energy and mining regulation noted that the narrative surrounding critical raw materials has transformed in recent years.

“Rearmement and massive investments in defense will likely spillover into critical minerals,” said the expert, choosing to remain anonymous for privacy reasons. 

“Much of the infrastructure that is needed for defense, like drones, AI systems, radar and missile guidance — it’s quite metals-intensive and power hungry … If Europe is really serious about rearming and reinforcing its strategic autonomy, it cannot do so while remaining reliant on Chinese electric vehicle batteries and rare earth magnets.” 

But before EU security and military returned to mainstream geopolitical discussions, critical raw materials had already been identified as strategic for the green energy transition. 

The expert observed this change: “What concerns me professionally is that the energy transition is not fueling this trend anymore. Yes, rare earth and battery metals are kind of like the new oil, but resource control itself is the new bargaining power,” he said.

“The question is whether democracies can build secure, ethical, and competitive supply chains fast enough and without resorting to the same extractive zero-sum game they claim to oppose.”

The European stake 

Where countries like the United States and China have been in the critical raw materials business for some time now, the European Union has been late to join. China has been particularly active in Africa, not only taking a leading role in critical raw materials mining, but also investing substantially in various infrastructure projects through its Belt and Road Initiative (BRI). 

Eszter Szedlacsek is a climate policy expert with Vrije Universiteit Amsterdam and research fellow with the Africa Policy Research Institute. She highlighted that comparing China’s influence in Africa to the European Union’s is difficult. 

Under the European Union’s Critical Raw Materials Act (CRMA), several bilateral partnerships in Africa are outlined. “But these are quite opaque,” said Szedlacsek. “So their success and whatever impact they have and however they can compete with the Chinese influence really depends on how they will be implemented.” 

And although the strategic projects in Africa outlined in the CRMA are much more concrete, they are minimal in comparison to China. “Four projects in the entire African continent, it’s not too extensive,” said Szedlacsek, adding, however, that the EU brings its own unique value.

“How the EU tries to differentiate itself is through local value addition, supporting industrialization locally in African countries,” she said.

Similarly, Arthur Leichthammer, a policy fellow for geoeconomics at the Jacques Delors Centre, added that price is not the only consideration when it comes to competition with China. “They’re not competing on price,” he said. “You will not compete on price.” 

Other factors come into play, such as ensuring a safe and reliable trading partner. 

“There are resilience criteria that must be priced in,” said Leichthammer. “If you would assume a frictionless trade, you would just keep on buying from China … you will not be able to rely on China for continuous supply.” 

Cooperating with the United States

In spite of Trump’s recent rhetoric surrounding Greenland and the possibility of a U.S. acquisition – which was met with widespread European opposition – the American government indicated a more collaborative attitude at its February 4, 2026 Critical Minerals Ministerial, seemingly reframing the country’s approach to international relations — at least on the subject of critical raw materials. 

“Today the United States, together with our partners and allies, has set out to reshape the global market for critical minerals and rare earths,” reads the government communication. 

Echoing similar statements from the RESourceEU Action Plan, the U.S. government announced collaboration with over 50 countries, as well as the European Commission. 

“The [critical minerals and rare earths market] is highly concentrated, leaving it a tool of political coercion and supply chain disruption, putting our core interests at risk. We will build new sources of supply, foster secure and reliable transport and logistics networks, and transform the global market into one that is secure, diversified, and resilient, end-to-end.” 

In a joint press statement, the nature of the collaboration between the European Commission and the United States is explained in further detail. Within the next 30 days, a Memorandum of Understanding “aimed at boosting critical minerals supply chain security” will be signed between the two parties.  

What this collaboration means for critical raw materials development in Greenland, demonopolizing China’s role within the market, and the EU’s RESourceEU Action Plan has yet to be seen. 

The post Europe’s Critical Minerals Race Heats Up as Green Transition Faces Geopolitical Risk appeared first on European Business & Finance Magazine.

Quick Answer: As the EU phases out Russian gas by 2027, Greece is leveraging its geography, two operational LNG terminals, and deepening ties with Washington to become the entry point for US liquefied natural gas into southeastern and central Europe. The Vertical Corridor — a pipeline network running from Greek terminals through Bulgaria, Romania, and Moldova to Ukraine — is the infrastructure bet that could make it happen.

For decades, Thrace sat at the southeastern edge of Europe as a geopolitical afterthought — remote, underfunded, and largely ignored by Brussels. Today it is at the centre of a multibillion-euro energy redesign that could reshape how gas flows across the continent.

The catalyst is straightforward. The EU has legislated a full ban on Russian gas: spot LNG imports are already prohibited, long-term LNG contracts end in January 2027, and pipeline gas must cease by September 2027. Before Russia’s full-scale invasion of Ukraine, Moscow supplied roughly 40% of the bloc’s natural gas. By the first half of 2025, that share had fallen to 13%, but still represented over €15 billion in annual payments. Europe needs replacement supply at scale, and it needs infrastructure to deliver it to the countries most exposed — particularly in central and eastern Europe.

Greece’s pitch is that it can be the front door.

Two Terminals, One Corridor

The country operates two LNG receiving facilities. The first is the Revithoussa terminal on a small island west of Athens, originally built in 1999 and expanded in 2018, with a regasification capacity of roughly 5.1 billion cubic metres per year. The second is the Alexandroupolis FSRU — a floating storage and regasification unit that began commercial operations in October 2024 with a maximum capacity of 5.5 billion cubic metres annually, equivalent to 50–55 LNG tanker deliveries per year.

From these two entry points, regasified LNG flows northward through the Vertical Corridor, a cross-border pipeline network connecting Greece with Bulgaria, Romania, Moldova, and Ukraine. The corridor was assembled largely from existing infrastructure after 2022, when Russia cut off gas supplies to Bulgaria after Sofia refused to pay in roubles. Five national transmission operators — Greece’s DESFA, Bulgaria’s Bulgartransgaz, Romania’s Transgaz, Moldova’s VestMoldTransgaz, and Ukraine’s GTSOU — now coordinate capacity along the route, including a dedicated monthly booking product for deliveries from Greek terminals to Ukrainian underground storage facilities.

The same corridor can serve Hungary, Slovakia, and potentially Austria and Italy via the Trans Adriatic Pipeline (TAP), which already carries Caspian gas from Azerbaijan through Greece to southern Europe.

US Money, US Gas

Washington has thrown significant weight behind the project. US LNG now accounts for nearly 60% of the EU’s total LNG imports, and the Turnberry trade deal struck last July included a pledge that the EU would purchase $750 billion in US energy products over three years. Greece’s energy minister Stavros Papastaurou has framed the relationship in explicitly strategic terms, positioning energy security as a cornerstone of transatlantic cooperation.

The financial backing is concrete. EXIM and the US International Development Finance Corporation have both expressed interest in financing a second FSRU at Alexandroupolis. The planned unit, named FSRU Thrace, has received environmental approval from the Greek government and would sit alongside the existing facility. Gastrade, the operator of the Alexandroupolis terminal, is leading the development.

However, the project carries a price tag of approximately €600 million — a sum its management says cannot be raised without European institutional support or US financing. A dedicated meeting organised by the US Department of Energy in Washington in late February brought together energy ministers and industry representatives from central and eastern European countries, alongside a European Commission delegation led by EU energy director general Ditte Juul Jørgensen. Financing for the Vertical Corridor was the top agenda item.

The Risks

Greece’s ambitions are not without complications. The Chatham House think tank has cautioned that long-term dependence on US LNG carries economic and environmental risk. Unlike pipeline gas, US LNG is traded on free-on-board terms, meaning sellers can redirect shipments to the highest bidder anywhere in the world. Greece and its neighbours would remain exposed to global price volatility regardless of how much terminal capacity they build.

European gas demand is also expected to decline as the energy transition accelerates, raising the possibility that new LNG infrastructure becomes underutilised. The Revithoussa terminal historically operated well below capacity even during periods of peak domestic demand.

There is also the question of Brussels. The European Commission has until recently resisted financing new gas infrastructure on the grounds that it conflicts with climate neutrality targets. That stance is softening under pressure from member states and the reality that natural gas will remain part of Europe’s energy mix as a bridge fuel for years to come. The outcome of that debate — expected to crystallise in 2026 — will determine whether projects like FSRU Thrace receive the European co-financing they need to proceed.

For now, Greece holds a geographic advantage that no amount of policy debate can relocate. It sits at the intersection of US supply and central European demand, with infrastructure that already works and expansion plans that have both Washington’s backing and Brussels’ attention. Whether it becomes Europe’s permanent gas gateway — or an expensive bridge to nowhere — depends on decisions being made in the next 12 months.

The post Why Greece Could Become Europe’s Most Important Gas Hub appeared first on European Business & Finance Magazine.

URL Slug: uk-entrepreneurs-leaving-britain-millionaire-exodus

Quick Answer: Almost 6,000 company directors have changed their country of residence since late 2023, according to Companies House filings analysed by the Financial Times. The departures accelerated sharply after Labour’s October 2024 Budget, which raised capital gains tax, scaled back business asset relief, and abolished the non-dom regime. Dubai is the top destination. Separately, Henley & Partners estimates the UK lost over 26,000 millionaires across 2024 and 2025 — the steepest wealth outflow of any country — taking an estimated $92 billion with them.

The numbers tell a story that no amount of political reassurance can soften. Companies House filings show that roughly 3,800 company directors changed their official country of residence between October 2024 and July 2025 alone — a 40% increase on the 2,712 who relocated during the same period the previous year. Combined, that puts the two-year total close to 6,000 directors who have formally moved abroad since late 2023.

April 2025 marked the sharpest single month, with 691 departures logged — a 79% jump on April 2024 and more than double the figure from April 2023. That month was not coincidental. It was when Labour’s most consequential tax changes formally took effect.

What Drove Them Out

The exodus traces directly to a series of fiscal reforms introduced by Chancellor Rachel Reeves in the October 2024 Budget and implemented through early 2025. The headline changes were sweeping and, for many business owners, devastating in their cumulative effect.

Capital gains tax for higher-rate taxpayers rose immediately from 20% to 24%. Business Asset Disposal Relief — formerly Entrepreneurs’ Relief, the tax break that allowed business owners to pay just 10% on the first £1 million of profit when selling a company — was cut to 14% in April 2025 and is legislated to rise again to 18% in April 2026. Business Property Relief, which allowed entrepreneurs to pass businesses to their children free of inheritance tax, was capped at 50% for assets over £1 million from April 2026.

Perhaps most significantly, the government abolished the non-domicile tax regime entirely. For decades, the non-dom system had allowed UK residents who claimed a permanent home abroad to shield their overseas income and gains from British taxation. Its removal — long debated but never enacted by previous governments — pulled the rug from under thousands of internationally mobile entrepreneurs and investors who had built their financial planning around it.

The effect was not subtle. Investment migration applications from UK nationals surged 337% over five years, according to Henley & Partners. While some departing directors were foreign nationals returning home, a growing share were British-born business owners from finance, property, and technology — sectors that had driven the UK’s innovation ecosystem for a generation.

Where They Are Going

Dubai has emerged as the primary destination, and it is not hard to see why. The UAE charges zero personal income tax, zero capital gains tax, and zero inheritance tax. Its Golden Visa programme offers 10-year residency for investors and entrepreneurs, while its free zones permit 100% foreign ownership. The UAE received a record 9,800 relocating millionaires in 2025 — the highest inflow of any country globally.

Beyond Dubai, departing directors and wealthy individuals have gravitated toward Switzerland, where the forfait lump-sum taxation system allows qualifying foreign nationals to negotiate fixed annual payments regardless of actual income. Monaco remains a perennial draw for the ultra-wealthy, while tax-friendly US states like Florida and Texas are attracting those with transatlantic business interests. European destinations including Italy, Spain, and Portugal have also seen increased interest, particularly among semi-retired entrepreneurs seeking lifestyle as well as fiscal advantage.

The Millionaire Numbers

The director departures are just one layer of a much broader wealth migration. Henley & Partners estimates that the UK recorded a net outflow of roughly 9,500 millionaires in 2024 — already the largest of any country that year. In 2025, that figure more than doubled to 16,500, representing approximately $92 billion in personal wealth leaving Britain. That two-year combined loss of over 26,000 millionaires is the steepest ever recorded for any single nation.

The UK’s billionaire count fell from 165 to 156 in a single year. High-profile departures include steel magnate Lakshmi Mittal and shipping billionaire John Fredriksen, both of whom relocated to Dubai. Goldman Sachs executive Richard Gnodde and real estate developers Ian and Richard Livingstone have also been cited among those reconsidering London.

New World Wealth research shows that over 60% of centi-millionaires — those with $100 million or more — are entrepreneurs and company founders. Their departure carries consequences that extend far beyond lost tax receipts. These are the individuals who build the companies that create jobs, fund innovation, and anchor the professional services ecosystems of London and other British cities.

What It Means for the UK Economy

The Treasury expects its tax reforms to raise £33.8 billion over five years. But the Office for Budget Responsibility has warned that the yield depends heavily on how many high earners ultimately leave — and the early evidence suggests more are leaving than anticipated.

The economic consequences operate on multiple levels. Every departing entrepreneur takes not only their personal tax contribution but their business investment, their spending in the domestic economy, and their employment footprint. Companies are already responding by hiring contractors rather than permanent staff to reduce tax exposure, further eroding the PAYE base.

The London Stock Exchange — once the world’s largest by market capitalisation, now ranked eleventh — has seen 88 firms delist in a single year. Its performance over the past decade has been stark: the FTSE 100 grew by just 6.1% annually versus 15.5% for the S&P 500. This declining competitiveness feeds directly into the narrative driving entrepreneurs abroad.

Critics, including the Tax Justice Network, argue the scale of the exodus is overstated — that the 9,500 millionaires who left in 2024 represented just 0.3% of the UK’s total millionaire population. But even sceptics acknowledge the direction of travel. When the individuals who create wealth, build companies, and attract global capital conclude that the system no longer works for them, the damage is not measured only in headcount. It is measured in the opportunities that never arrive, the companies that are never founded, and the jobs that are never created.

Britain does not have a spending problem or even, primarily, a revenue problem. It has a confidence problem. And confidence, once lost, does not come back on a government’s preferred timeline.

The post 6,000 Entrepreneurs Have Quit Britain — Here’s Where They Went and The Billions That They Took appeared first on European Business & Finance Magazine.

Something unusual is happening in global capital markets. After years of persistent outflows and chronic underperformance relative to the United States, European equities are suddenly the destination of choice for the world’s biggest investors — and the money is arriving at a pace never seen before.

February 2026 is on track to be the highest month for inflows into European stocks ever recorded. Two consecutive weeks of approximately $10 billion in flows have poured into European equity funds, according to data from EPFR, which tracks ETF and mutual fund allocations globally. The Stoxx Europe 600, the continent’s blue-chip benchmark, has punched through a series of all-time highs this month, closing above 630 for the first time. National indices in the UK, France, Germany and Spain have all hit records of their own. The FTSE 100 crossed the symbolic 10,000 mark for the first time earlier this year. The DAX posted its best annual performance in six years in 2025 and has continued climbing.

The reversal is striking. Between 2022 and 2024, European equity funds experienced persistent net selling, particularly from domestic investors. Cumulative flows over a four-to-five year window have only just turned positive. The fact that they are now accelerating — at record pace — reflects a confluence of forces that is reshaping how global allocators think about risk, value and diversification.

The US Problem

The primary driver is not enthusiasm for Europe. It is anxiety about America.

US equity valuations have stretched to levels that are making even bullish investors uncomfortable. The S&P 500 trades at a price-to-earnings ratio of approximately 27.7, compared with 18.3 for the Stoxx Europe 600, according to London Stock Exchange Group data. The gap is largely explained by the dominance of technology megacaps in US indices — companies whose valuations have been turbocharged by AI enthusiasm but which are now facing growing questions about whether the investment cycle can sustain itself.

Concerns over a potential AI bubble have intensified this year, with several high-profile earnings misses in the US tech sector and growing scepticism about the near-term revenue potential of generative AI applications. That has prompted a rotation out of the concentrated, tech-heavy US market and into regions offering broader sector exposure.

“It’s a lot of global investors wanting to diversify away from an expensive US market,” said Sharon Bell, senior equities strategist at Goldman Sachs. “Europe as an equity market offers a different exposure — there’s less tech.”

That different exposure is precisely the point. European indices carry heavy weightings in banking, industrials, energy, healthcare, defence and consumer goods — “old economy” sectors that benefit from economic recovery, fiscal stimulus and rising defence budgets rather than from speculative momentum around a single technology theme.

The European Recovery Story

The rotation is being reinforced by genuine improvement in European economic fundamentals. Germany, the region’s largest economy, returned to growth last year for the first time since 2022. A recent surge in German factory orders has bolstered confidence that the historic defence spending package announced last year is beginning to permeate the real economy. Bank of America analysts have upgraded German equities to overweight in response.

The eurozone as a whole is expected to grow by around 1.3 per cent in 2026, according to Goldman Sachs forecasts — modest by global standards, but meaningful after years of stagnation. Inflation has cooled significantly, giving the European Central Bank room to maintain a supportive policy stance. Consumer confidence, while still fragile, has stabilised. Corporate earnings growth is forecast at around 5 per cent for 2026 and 7 per cent for 2027, with banks, financial services and European technology companies expected to lead the gains.

Goldman Sachs has lifted its 12-month target for the Stoxx Europe 600 to 625, implying around 8 per cent total return. Citi is more bullish still, with a target of 640 and an expectation of 11 per cent earnings-per-share growth. Both banks point to the same underlying thesis: European equities are not cheap by their own historical standards — they sit in the 71st percentile of their 25-year P/E range — but they are substantially cheaper than almost every other major asset class, and dramatically cheaper than the US.

Who Is Buying

The composition of the inflows matters as much as their size. A significant share of the buying is coming from US-based investors — allocators who spent years overweight domestic tech and are now actively seeking geographical diversification. This is a structural shift rather than a tactical trade. After a decade in which US exceptionalism was the dominant investment thesis, the combination of elevated valuations, concentrated sector risk and political uncertainty under the current administration is prompting a reassessment.

“Investors are essentially scanning the world and asking: where are the cheapest spots? Where are the opportunities?” noted one strategist. For many, Europe — with its valuation discount, sector diversification and improving macro backdrop — is the answer.

Institutional flows into European ETFs confirm the trend. The EURO STOXX 50, STOXX Europe 600 and DAX indices all attracted record ETF inflows in 2025, a pattern that has accelerated into 2026. Cyclical sectors are drawing the bulk of allocations, with industrials, financials and materials leading the way — a clear signal that investors are positioning for economic recovery rather than defensive shelter.

Risks Remain

None of this means European markets are without risk. The continent faces persistent structural challenges: low productivity growth, demographic headwinds, and an industrial base under pressure from Chinese competition and elevated energy costs. The chemicals and automotive sectors remain under significant strain, though these represent a relatively small share of the Stoxx Europe 600’s market capitalisation.

Geopolitical uncertainty also looms. The unresolved conflict in Ukraine, rising US–Iran tensions, and the unpredictable trajectory of US trade policy all have the potential to disrupt the current rally. And some strategists are already warning that the easy gains may be behind us. A Bloomberg poll of 17 forecasters found a median expectation that the Stoxx Europe 600 will finish 2026 roughly where it is now — suggesting the tailwinds have been largely priced in.

But for global investors who spent the past decade overweight a single country, a single sector and a single narrative, the case for European diversification has rarely looked stronger. The money is following the logic. Whether the fundamentals can sustain the flows will be the defining question for European markets in the months ahead.

The post Why Investors Are Pouring Record Sums Into European Stocks — And Leaving Wall Street Behind appeared first on European Business & Finance Magazine.

Spain has become the first country to openly declare its intentions in what is shaping up to be one of the most consequential leadership contests in European economic governance. The country’s economy ministry said on Wednesday that Madrid would “actively work to ensure it holds an influential and meaningful position” at the European Central Bank, adding that Spain seeks “a leadership role within Europe’s main economic institutions.”

The statement, from Economy Minister Carlos Cuerpo, marks the first time any eurozone government has publicly staked its claim to the ECB presidency since speculation over Christine Lagarde’s departure intensified this week. It is a calculated move — and one that immediately reframes the succession from a quiet diplomatic process into an open political contest.

Why Now?

The timing is no accident. On the same day Spain made its announcement, the Financial Times reported that Lagarde is expected to step down before her eight-year term ends in October 2027. The move would allow outgoing French President Emmanuel Macron and German Chancellor Friedrich Merz to oversee the appointment of her successor The Irish Times — crucially, before French presidential elections in April 2027 that could bring Marine Le Pen’s far-right National Rally to power for the first time.

The ECB responded by saying that Lagarde remains focused on her mission and has not taken any decision regarding the end of her term. Euronews Bank of France Governor François Villeroy de Galhau dismissed the reports as a rumour. Euronews But the political machinery is already turning. Villeroy himself recently announced his own early departure from the Bank of France, a move that ensures Macron rather than a potential far-right successor controls that appointment too.

For Spain, the window is narrow and the logic is clear: if the succession process begins now, Madrid has leverage. If it waits, the deal may be done without it.

Spain’s Candidate

While the economy ministry stopped short of formally nominating anyone, the candidate is no secret. Cuerpo described former Bank of Spain governor Pablo Hernández de Cos as an “excellent professional” with a career that is “more than proven,” enjoying the recognition of his peers. European Newsroom

Hernández de Cos served as governor of the Bank of Spain from 2018 to 2024 and currently leads the Bank for International Settlements in Basel. An FT poll of European economists in December placed him alongside former Dutch central bank chief Klaas Knot as the most likely successor to Lagarde. Euronews Bloomberg analysts have reached similar conclusions, viewing the pair as established frontrunners.

His profile suits the moment. He is a technocrat rather than a politician, which matters for an institution that jealously guards its independence. He brings direct eurozone central banking experience at the highest level. And he represents Europe’s fourth-largest economy — a country that has never held the ECB presidency despite being the bloc’s fastest-growing major economy in recent years.

The Competition

Spain’s public declaration is designed to force the pace, but it is far from the only contender. Klaas Knot is increasingly viewed as a consensus candidate — a former hawk who has moderated into a more centrist, coalition-building figure. Advisor Perspectives He is particularly attractive to Berlin, where Chancellor Merz may prefer backing a like-minded Dutchman over the political complexity of nominating a German.

Germany’s own ambitions are complicated by the fact that European Commission President Ursula von der Leyen is German and her term runs until 2029. Advisor Perspectives Having both the Commission and the ECB led by Germans simultaneously would be a hard sell to other member states. Still, both Bundesbank President Joachim Nagel and ECB Executive Board member Isabel Schnabel have signalled interest.

France, having held the presidency twice in succession with Jean-Claude Trichet and Lagarde, is widely expected to step aside this time, though Paris will want something in return — possibly the ECB chief economist role when Philip Lane’s term expires in May 2027.

The Bigger Game

The ECB presidency is never decided in isolation. It is part of a broader package of appointments across European institutions, negotiated behind closed doors by heads of state. Four of the six members of the ECB Executive Board will see their terms expire by the end of 2027 MarketScreener, including Lagarde, Lane, and Schnabel. That means three or four seats on the most powerful economic body in Europe will be reshuffled simultaneously — creating a complex negotiation where countries trade positions across institutions.

Spain’s public move is as much about signalling as it is about any single candidate. By being first to declare, Madrid is establishing itself as a serious player in a negotiation that will ultimately involve Germany, France, Italy, and the Netherlands at a minimum. Cuerpo’s statement that Spain “will not lack excellent candidates” is diplomatic language for something blunter: we want the top job, and we expect to be at the table.

What It Means for Markets

For now, the practical impact is limited. Nomura economist Andrzej Szczepaniak noted that the ECB takes monetary policy decisions by consensus, and whoever replaces Lagarde is unlikely to radically shift the institution’s direction. Advisor Perspectives Inflation is expected to hover near 2%, and the policy path is relatively well telegraphed.

But the identity of the next ECB president matters beyond rate decisions. It will determine how the institution navigates Europe’s energy transition, its response to the next recession, and its role in the increasingly politicised debate over European sovereignty. Spain is betting that its moment has arrived. The question now is whether the rest of Europe agrees.

The post Spain Makes Its Move for the ECB Presidency — The Race Is Now On appeared first on European Business & Finance Magazine.

The debt of one of Europe’s largest chemicals companies has become a battleground for some of the world’s most aggressive credit hedge funds. On one side, investors who scooped up bonds at deep discounts and piled in fresh financing, betting that a turnaround was coming. On the other, funds that shorted the debt early and have watched their bets pay off spectacularly as the company’s bonds collapsed to almost nothing.

The company at the centre of this fight is Kem One, a heavily indebted French producer of PVC and caustic soda owned by the US private capital group Apollo Global Management. Its €450 million in publicly traded bonds, which were changing hands at around 70 cents on the euro just over a year ago, have since cratered to roughly 2 cents. Investors holding those bonds are now pricing in near-total losses, making Kem One one of the worst-performing credits in Europe’s ailing chemicals sector.

For the hedge funds involved, the financial stakes run into hundreds of millions of euros — and the fight is far from over.

The Backers and the Shorts

Among Kem One’s largest financial backers are two of the most prominent names in distressed credit: London-based Arini Capital, one of Europe’s most active distressed investors, and New York-based Monarch Alternative Capital.

Early last year, Arini and Monarch teamed up to provide Kem One with €200 million in fresh super senior financing. The loan was structured as a five-year delayed-draw facility, with proceeds used to fund the company’s business plan, pay down €100 million of revolving debt, and keep operations running. At the time, the deal looked like a calculated bet — Kem One was under pressure, but the company was still operational and the bonds were still trading at levels that implied a meaningful recovery was possible.

That bet has not played out. Since the financing was extended, Kem One’s fortunes have deteriorated sharply. The company posted negative €12 million of EBITDA for the twelve months to June 2025. Cash continued to burn. In January 2026, the same lenders provided a further €30 million in emergency debt as the company approached what analysts estimated could be a liquidity cliff by mid-2026.

On the other side of the trade, funds that shorted Kem One’s bonds — betting that their value would fall — have reaped enormous windfalls. A bond that drops from 70 cents to 2 cents on the euro generates catastrophic losses for holders and extraordinary profits for shorts. The speed of the decline has made Kem One one of the most profitable distressed short positions in European credit markets in recent memory.

The Bondholder Scramble

The collapse in bond prices has triggered a scramble among creditors to protect what value remains. A group of bondholders reportedly holding around two-thirds of Kem One’s €450 million in 2028 senior secured notes has been working with law firm Gibson Dunn to explore its options.

The group, which includes Arini and BlackRock among others, has considered several moves. One option involves providing new super senior financing using remaining debt capacity in the bond documents — roughly €47.5 million. Another involves attempting to uptier the group’s existing bond holdings into higher-ranking 1.5 lien notes, which would improve their recovery position at the expense of bondholders outside the group.

Such manoeuvres are common in US distressed credit markets but remain more contentious in Europe, where creditor-on-creditor aggression is less normalised. The intercreditor agreement governing Kem One’s debt includes protections that require 90% bondholder consent for any amendment that would expressly subordinate the existing notes. That threshold makes a non-consensual uptiering difficult, though not impossible depending on how the documentation is interpreted.

For bondholders who bought at 70, 50, or even 30 cents and now find themselves holding paper worth 2 cents, the options are grim. Either participate in whatever rescue financing emerges — committing more money to a deteriorating situation — or accept steep losses and walk away.

The post Hedge Funds in Face-Off Over Debt of European Chemicals Catastrophe appeared first on European Business & Finance Magazine.

Wero has signed 43.5 million users in its first year and is launching e-commerce payments in 2026. Combined with the digital euro vote and a new euro stablecoin, Europe’s breakup with Visa and Mastercard is accelerating.” (210 chars — trim to:)

“Wero has 43.5 million users after one year. E-commerce payments launch in 2026, iDEAL is migrating, and the European Parliament just backed the digital euro. Europe’s payments breakup with Visa and Mastercard is real.” (198 chars)

Quick Answer: Europe’s push to break its dependence on Visa and Mastercard is accelerating on three fronts. Wero, the pan-European digital wallet backed by 16 banks, has reached 43.5 million registered users and processed over €7.5 billion in transfers in its first year. E-commerce payments go live in 2026. In parallel, the European Parliament voted on 10 February to back the digital euro for a 2029 launch, and a consortium of 11 European banks is building a euro-backed stablecoin. Together, these initiatives represent the most coordinated challenge to US payments dominance in decades.

When EBM first reported on Europe’s $24 trillion breakup with Visa and Mastercard, the question was whether the ambition could translate into adoption. The early data suggests it can.

Wero, the digital wallet built by the European Payments Initiative, has signed up 43.5 million users across Germany, France and Belgium in its first twelve months of operation. More than 100 million transactions have been processed, totalling over €7.5 billion in transfers. For a system that launched in mid-2024 with peer-to-peer payments only, those figures represent meaningful traction — not a pilot, but a payments network building real scale.

The next twelve months will determine whether Wero can move from person-to-person transfers into the far larger and more commercially significant world of online shopping and in-store payments.

E-Commerce Is the Real Test

Peer-to-peer transfers prove the technology works. But the revenue — and the threat to Visa and Mastercard — sits in e-commerce and point-of-sale transactions. That is where the card networks earn their fees, and where European merchants pay the toll.

Wero’s e-commerce functionality launched in Germany at the end of 2025 and is rolling out across Belgium and France in 2026. The first online retailers are already live. In France, Air France, E.Leclerc, Orange, Veepee and Dott have signed agreements to accept Wero payments. The French government’s tax authority, the DGFIP, has also announced plans to integrate Wero as a payment method for public services — a signal of institutional confidence that goes beyond the private sector.

NFC-enabled point-of-sale payments — allowing consumers to tap and pay in physical shops — are scheduled for 2026 and 2027. If Wero can deliver a consumer experience comparable to Apple Pay or contactless card payments, it will compete directly with the infrastructure that underpins Visa and Mastercard’s European revenues.

The Network Is Expanding

Two new countries join in 2026. Luxembourg goes live in June. In the Netherlands, the migration from iDEAL — the country’s dominant online payment system — to Wero begins with a co-branding phase in early 2026 and is expected to be fully complete by the end of 2027. That means every Dutch merchant currently accepting iDEAL will need to transition to Wero, effectively delivering an entire national payments market to the European system.

The partnership between EPI and the EuroPA Alliance, signed in late 2025, extends Wero’s potential reach to 15 countries and more than 382 million people. Revolut joined EPI in June 2025, bringing its massive European customer base into the network. N26 signed in December 2025, planning to offer Wero in Germany, France and the Netherlands by the second half of 2026. Austrian banks have also signalled support, with Payment Services Austria confirming backing for the initiative.

This matters because payments networks live or die on scale. Merchants accept payment methods that consumers carry. Consumers adopt methods that merchants accept. Breaking the Visa-Mastercard loop requires reaching a critical mass of both — which is precisely why Europe’s fintechs have been building alternative payment rails for years.

Three Fronts, One Strategy

What makes this moment different from previous European attempts at payments independence is the convergence of three parallel initiatives.

First, Wero is delivering commercial-grade infrastructure with real users and real transactions. Second, the European Parliament voted on 10 February to back the digital euro — a state-backed central bank digital currency targeting a 2029 launch. Third, a consortium of 11 European banks is developing a euro-backed stablecoin to compete with dollar-denominated tokens in the digital asset space.

Each addresses a different layer of the payments stack. Wero targets everyday consumer and merchant transactions. The digital euro provides a public, sovereign settlement layer. The stablecoin competes in cross-border and crypto-native markets. Together, they represent the most coordinated effort to build European-owned financial infrastructure since the creation of SEPA.

The Risks Haven’t Disappeared

Sceptics point to Europe’s long history of fragmented payments initiatives that promised scale but never delivered. Wero must still prove it can convert 43 million peer-to-peer users into habitual e-commerce and in-store customers. The iDEAL migration in the Netherlands will be a critical test — forced transitions create friction, and friction creates backlash.

There is also the competitive reality. Apple Pay, Google Pay and PayPal are deeply embedded in European consumer behaviour. Convincing shoppers to switch to a less familiar system requires not just functionality but a meaningfully better experience — lower fees, faster settlement, stronger consumer protections.

And the broader European payments landscape remains fragmented. Southern and Eastern European markets are largely absent from Wero’s current roadmap. Until the system reaches Spain, Italy, Poland and the Nordics, it remains a Western European project with continental ambitions.

The Direction Is Clear

None of this is guaranteed to succeed. But the trajectory has shifted. A year ago, Europe’s payments sovereignty agenda was a policy discussion. Today, it has 43.5 million users, €7.5 billion in transfers, parliamentary backing for a digital currency and a growing coalition of banks, fintechs and governments pulling in the same direction.

The breakup with Visa and Mastercard has not happened. But the alternative infrastructure is no longer theoretical. It is live, it is growing, and in 2026, it enters the market that actually matters: the one where merchants and consumers spend money.

The post Europe’s Payments Disruptor: How Wero Scaled to 43 Million Users appeared first on European Business & Finance Magazine.

As talks move forward after the EU-India Startup Partnership announcement, founders on the frontline will judge it on one simple question: does it make building easier? The proposed partnership – designed to deepen cross-border collaboration between the two regions’ startups ecosystems – has the potential to be a genuine win-win. Europe and India are already home to mature startup ecosystems, with deep technical talent, active investor communities, and increasingly hands-on public policy shaping innovation.

Both regions also rely heavily on public policy to steer innovation in areas such as AI, semiconductors and clean tech. In Europe, framework programmes have been particularly influential: since 2007, EU-backed startups have received around €12bn in public funding and generated more than €500bn in enterprise value. This demonstrates how coordinated policy can translate into commercial scale.

On paper, it’s clear why these nations complement each other. Europe’s pool of tech specialists has grown by more than 60% over the past decade, reflecting sustained demand for software, data, and AI skills. India, meanwhile, continues to produce vast cohorts of engineers – its estimated 4.3 million software engineers account for roughly 15% of the global software engineering workforce – and founders. This underlines the depth of technical talent fuelling both domestic scale-ups and global tech hubs. 

However, while the strengths are complementary, they have evolved differently. India offers a single, vast national market with rapid digital adoption. Europe remains fragmented across languages, regulatory regimes, and go-to-market models. Funding profiles diverge, too. Europe has greater late-stage depth in certain hubs and strong industrial R&D intensity. India excels at rapid company formation and cost-efficient scaling across a population-sized market.

The opportunity lies in combining Europe’s lab-to-market strengths with India’s market-to-scale capabilities. The question is how to make it work in practice. Trade deals are frameworks; startup growth is infrastructure. The gap between the two is where ambition either becomes execution or quietly dissipates.

If we think of this partnership as a bridge, it may struggle. Bridges imply a one-time crossing between two fixed points. What founders need is closer to a corridor: something that supports repeated movement of capital, talent, ideas, and customers in both directions.

Building that corridor requires more than goodwill. It means aligning capital timelines so cross-border co-investment works in practice – for example, enabling European and Indian funds to invest seamlessly in each other’s jurisdictions. It also means reducing duplicated regulatory friction, so startups are not navigating two entirely different rulebooks when expanding. And it requires predictable soft-landing mechanisms – accelerators, landing pads, procurement pathways and visa frameworks – that make market entry systematic rather than heroic.

There is also a cultural dimension that should not be underestimated. India’s startup ecosystem operates with visible optimism and momentum. There is a widespread expectation that scale is not a distant aspiration but a default trajectory. Europe, by contrast, often builds carefully – with strong safeguards, high standards, and detailed compliance frameworks.

Those strengths are certainly valuable. Still, exposure to India’s culture of optimism and speed could encourage Europe to be bolder in reducing unnecessary red tape, more open to calibrated risk, and more confident in embracing the future. Recent discussions around initiatives such as EU Inc. suggest that the appetite for change is growing.

Partnerships can move more than capital; they can shift mindset. At the same time, it is important to avoid a one-directional dynamic. The goal should not be a pipeline where talent flows one way, and scale accrues in only one geography. Two-way talent circulation, reciprocal investment, and shared scale pathways must sit at the centre of this partnership – ensuring that founders, investors, and institutions on both sides benefit equally.

Joint regulatory sandboxes in areas such as AI or climate tech could allow startups to test and deploy across both markets simultaneously. Co-investment vehicles could better match public and private capital. University and research partnerships could accelerate commercialisation on both sides.

None of this is glamorous; ecosystem infrastructure rarely is. It is more akin to maintaining a railway network than cutting a ribbon at a launch event. The tracks must align, the gauges must match, and someone has to ensure the trains actually run on time. 

But if that work is done well, the EU-India Startup Partnership could represent something significant: a modern model of economic cooperation built around startups as primary actors of cross-border growth.

The next phase of globalisation will not be defined solely by multinational corporations or tariff schedules. It will be shaped by founders building AI systems, deep tech platforms and clean energy solutions across jurisdictions.

To put it another way: trade deals set the intention; startup corridors deliver the outcome. If Europe and India can move from announcement to execution – from framework to functional pathway – this partnership can become more than a diplomatic milestone. It could become a practical scale engine for both ecosystems. Ultimately, that is the standard by which founders – in Berlin, Bangalore, and beyond – will judge it. Written by Steven Drost, Co-founder and Executive Vice Chairman at CodeBase

The post The EU–India Trade Deal That Could Change Europe’s Economic Future appeared first on European Business & Finance Magazine.

Quick Answer: The European Parliament voted on 10 February 2026 to endorse both online and offline versions of the digital euro, clearing a major political hurdle. If legislation passes in 2026, the ECB aims to launch the currency by 2029. The move is designed to reduce Europe’s reliance on Visa, Mastercard and other US-controlled payment infrastructure, which currently processes the vast majority of European card transactions.

The European Parliament has given the digital euro its most significant political endorsement to date. On 10 February, lawmakers voted 443 in favour to back the European Central Bank’s proposal for a central bank digital currency that would function both online and offline — rejecting an earlier attempt by the lead parliamentary rapporteur to restrict it to offline use only.

The vote matters because the ECB cannot issue a digital euro without legislative approval. If the regulation passes through Parliament and the European Council in 2026, the ECB plans to begin testing in 2027 and aims for a first issuance by 2029.

But this is not a payments modernisation project. It is a sovereignty play.

The $24 Trillion Vulnerability

Every time a European consumer taps a card, pays online or transfers money abroad, the transaction overwhelmingly flows through infrastructure owned by American companies. Visa and Mastercard together process approximately $24 trillion in transactions annually. European card and mobile payments run almost entirely through non-European networks — a vulnerability that ECB President Christine Lagarde has described as urgent.

This dependence, explored in depth in EBM’s analysis of Europe’s $24 trillion breakup with Visa and Mastercard, has transformed from a technical inconvenience into a geopolitical risk. Sanctions regimes, trade disputes and US-China tensions have demonstrated how control over payments infrastructure can become a lever of economic power. Brussels no longer views this as a market issue. It views it as a security issue, on par with energy dependence and defence procurement.

What the Digital Euro Would Actually Do

Unlike cryptocurrencies or private stablecoins, the digital euro would be a direct liability of the ECB — state-backed digital cash, not a speculative asset. The framework endorsed by Parliament emphasises several design principles.

Offline functionality is central. The system would allow payments without internet access, replicating the resilience of physical cash during outages, cyber incidents or crises. This was a key area of political debate — the rapporteur Fernando Navarrete had argued for an offline-only version, but Parliament rejected this in favour of the ECB’s full dual-mode proposal.

The currency would be non-interest-bearing and subject to holding caps, designed to prevent deposit flight from commercial banks during times of stress. Privacy protections, particularly for small offline transactions, are intended to replicate the anonymity of cash — a deliberate contrast with surveillance-heavy CBDC models being developed elsewhere.

By providing a public, neutral settlement layer, the ECB hopes to reduce merchant fees, lower barriers for European payment providers and preserve access to state-backed money in a digital economy increasingly dominated by private platforms.

The Fintech Dimension

The digital euro does not exist in isolation. It sits alongside a broader European push to reclaim control over payment rails. The European Payments Initiative — backed by 16 major banks — has already launched Wero, a pan-European digital wallet covering 130 million users across 13 countries. Meanwhile, European fintechs are building alternative payment infrastructure that bypasses card networks entirely through instant bank-to-bank transfers.

In parallel, a consortium of 11 European banks is developing a euro-backed stablecoin designed to compete with dollar-denominated stablecoins that currently dominate the crypto payments market. S&P Global Ratings estimates the euro stablecoin market could grow from €650 million to €1.1 billion by 2030.

These initiatives — digital euro, Wero, euro stablecoin — represent a coordinated, if not always perfectly aligned, effort to ensure that when money becomes software, Europe retains control of the code.

The Resistance

The path to 2029 is far from clear. German banking lobbies resisted the project for more than two years, delaying progress far beyond the ECB’s original timeline. Commercial banks worry that a digital euro could cannibalise deposits, undermining a funding model that underpins Europe’s broader financial system.

Some lawmakers remain sceptical. German MEP Markus Ferber has argued that the digital euro risks becoming a political prestige project rather than a response to genuine consumer demand. The far right opposes it, and support within centrist parties remains divided. Building a legislative majority will require continued compromise on privacy, bank protections and the scope of the currency’s use.

There is also competitive pressure from the private sector. Stablecoins — particularly dollar-pegged tokens like USDC and USDT — are gaining traction faster than CBDCs globally. As one Citi executive recently noted, stablecoins have effectively overtaken the CBDC narrative in markets where regulatory clarity exists.

Strategic Infrastructure, Not Consumer Convenience

For consumers, the early impact of a digital euro may be modest. Cards, cash and mobile wallets will continue to dominate everyday payments. But for policymakers, the digital euro represents something more fundamental: the assertion that Europe’s financial infrastructure should not be controlled from outside its borders.

It is increasingly clear that payments have become geopolitical infrastructure. The digital euro is Europe’s answer to a world in which financial networks are no longer neutral utilities but instruments of power. Whether it arrives on time, on budget and with sufficient public trust remains an open question. But the direction of travel — toward a European payments system that is less dependent on Washington, less vulnerable to disruption and more aligned with the continent’s strategic interests — is now politically irreversible.

The 2029 target is ambitious. The politics are messy. But the vote on 10 February made one thing clear: Europe has decided it can no longer afford to rent its financial plumbing from someone else.

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