Commentaries

Trumponomics Faces Market Test: Implications for Europe

The heightened risk aversion triggered by Trump's policies has not spread to Europe, where optimism prevails regarding more cohesive and responsive policymaking. A commentary by Lorenzo Bini Smaghi

A firm but measured response, aligned with rules and European interests, is better than excessive conciliation with the US administration. Here's why. A commentary by Lorenzo Bini Smaghi

From Germany's debt choices to Italy’s stance on rearmament, Ambassador Luigi Mattiolo analyses how the EU is evolving in the age of Trump. An interview by Stefano Feltri

The administration’s emphasis on stablecoins risks eroding the Federal Reserve’s independence and could weaken the dollar’s global standing. A commentary by Ignazio Angeloni

Financial discipline, growth potential, and deeper EU integration reassure investors amid rising defense budgets. A commentary by Lorenzo Bini Smaghi

The normalisation of war in political discourse is forcing a renegotiation of the European welfare state, a delicate balancing act that will determine whether defence budgets remain sustainable in the long run. A commentary by Stephanie Hofmann & Catherine E. De Vries 

The explicit goal of the new US administration is to protect the US tech industry and to dismantle European regulations, reverting to bilateral arrangements where the strongest naturally prevails. A commentary by  Lorenzo Bini Smaghi

The EU, along with the UK and Norway, has the resources and capabilities to sustain Ukraine’s fight and provide security guarantees if Putin agrees to a ceasefire. A commentary by Daniel Gros 

Should China and the US – where major market players are based – manage to sideline Europe in its regulatory isolation, the EU’s influence may wane. A commentary by Marco Bassini.

After the 2008 financial crisis, the ECB's supervision restored the soundness of euro area banks. Now, it has the opportunity to build a banking sector of continental dimension. A commentary by Ignazio Angeloni.

Trump’s ambitions to extend U.S. influence over neighboring countries align with Karl Haushofer’s notorious geopolitical doctrine. A new global order is emerging, and Europe may not be part of it. A commentary by Andrea Colli

As 80 years ago, today’s large states aim to impose their will on smaller nations. This time, however, no European leader is at the table. Will incoming German Chancellor Merz change this? A commentary by Catherine De Vries

The shared opposition of environmentalists and farmers to the EU-Mercosur trade deal reflects concerns about economic liberalization at the expense of ecological and social equity. A commentary by Pietro Galeone, Joseph Christopher Proctor, Romain Svartzman

The US President has halted plans for a central bank digital currency: a mere show of strength to undermine the Fed’s independence. A commentary by Ignazio Angeloni

The incumbent’s full control over a pivotal realm of power implies several risks related to the incumbent’s behavior. The first temptation is to self-justify the strict control over AI technology “for the good of mankind” . A commentary by Andrea Colli

The global financial system is at a crossroads of two related processes: post-crisis reform—the so-called Basel III—that is missing its final stage, and the new political course in the United States, where the incoming administration has declared war on all pre-existing rules.

A recently published report by the Institute for European Policymaking, written by a multidisciplinary team of researchers at Bocconi University and the Toulouse School of Economics, provides timely insights into these challenges and offers concrete policy recommendations across three critical areas

The German economy is weak not because of a lack of investment, but because of the sectors it goes into. German industry has specialised in mid-tech sectors, like automotive, that are now under increasing competitive pressure from China. A commentary by Daniel Gros

Former U.S. Treasury Secretary Larry Summers has acknowledged that the neutral interest rate will be higher than previously expected. This shift carries significant implications for public finances.

The geopolitical references in the inaugural address of the new US President are striking because they align closely with the concept of “classic geopolitics”—a vision of politics and international relations as an aggressive, zero-sum game. A commentary by Andrea Colli

Much of the impact of the new Trump Administration on Europe will depend on how the balance of power within the US plays out between the President and key corporate leaders, of Big Tech in particular

Both in the U.S. and Europe, the excess liquidity created over past decades has been only partially reabsorbed. It remains ready to fuel inflation if a matchstick is struck. A commentary by Franco Bruni

Linking relocation to a job in Ukraine would ensure that the return does not constitute a burden for Ukrainian public finances which are already under enormous strain

IEP@BU seeks to foster discussions—even on the most divisive topics—that are firmly rooted in data and rigorous analysis of empirical evidence

In a world where the number of smartphones is nearing that of people, and each device typically hosts two or three payment applications, the added value of X's new tool is limited

Reduced economic insecurity generates not only a direct increase in demand for populist commitments but also a change in culture in the direction of lower trust and prevalent exclusionary rhetoric, which in turn are further indirect channels through which populist movements thrive

We must be realistic about the level of structured cooperation we can expect to be able to achieve with the EU in the immediate term. But we should be ambitious

Remarks by Sir Jonathan Faull, Chair of European Public Affairs, Brunswick Group.

The foreign policy landscape is shifting fast, and it is time to overcome the post-Brexit- mutual diffidence. 

It defies any sense of equity that countries facing rising sea levels, or like Pakistan which suffered a flash flood in 2022, submerging a third of the country, should borrow on commercial terms to cope. 

The discussion explored practical ideas around the process of establishing a broad and deep partnership between the United Kingdom and the European Union in the areas of foreign, security, and defence policy.

A second term for Donald Trump could structurally intensify the trend toward trade fragmentation, heightening tensions, particularly between the United States and China, the world’s two largest economies.

The narrative of the EU as a peace project is that it allowed Europeans to reject military investments on the basis of the excuse that we were living in a post-war society. This is not true.

The fact that prices have risen considerably compared to four years ago will matter more to most voters when voting, and not that they have caused growth to slow.

The Honorary President of the IEP@BU Mario Monti opened the international conference "Democracy Today," organized by the Konstantinos Karamanlis Foundation in Athens, on the occasion of the fiftieth anniversary of Greece's transition to democracy

The age demographics in key swing states reveal a significant number of young potential voters who are more likely to support Kamala Harris. However, young voters are historically the least likely to turn out at the polls.

Europe will be called upon to make a difficult decision between pursuing the protectionist policies of the United States or taking advantage of the diplomatic and economic opportunities that American isolationism could offer.

“The Commission would like to be taking the lead on defense policy, but defense remains the domain of Member States”. Thomas Gomart is one of the most influential experts on foreign relations and geopolitics at the EU level: he has been director of the Ifri, Institute Francais de Relationes Internationales, since 2015. An expert in Russian geopolitics and the history of international relations, he has recently published the book L'accélération de l'histoire. Les noeuds géostratégiques d'un monde hors de contrôle ( Éditions Tallandier, 2024).

 The first elected president of the European Council, Herman van Rompuy, discusses how to fix the decision-making process at the EU level 

On 16 October 2024, Claudia Buch delivered a lecture titled Bank Profitability: A Mirror of the Past, Creating a Vision for the Future at Bocconi University. The event was co-organized by the Baffi Center on Economics, Finance, and Regulation and the Institute for European Policymaking @ Bocconi University (IEP@BU).

The 16^th meeting of the Conference of the Parties (COP 16) to the Convention on Biological Diversity (CBD), or "Biodiversity COP 16", will take place in Cali, Colombia, from October 21 to November 1.

The Uni­Credit-Com­merzbank deal is a test case for the ECB, which will rever­ber­ate into the future, and be a golden oppor­tun­ity for its super­vis­ory board to uphold its inde­pend­ence

This dismantling of the European Grean Deal would be one of the main mistakes that the Europeans could make. The often critics should not lead us to underestimate or marginalize people's desire to take action and deny the necessity to accelerate the transition.

On September 19, mister Roth gave a lecture to Bocconi students titled “Europe at the Crossroads: Turning Today’s Poly-Crisis Into Tomorrow’s Poly-Opportunity”. Eleanor Spaventa, a professor of European Law at Bocconi and a member of the IEP@BU managing board, chaired the event co-hosted by IEP@BU and the Department of Legal Studies.

While the focus of the new Commission will be crystallizing over the months and years to come, this short analysis of the mission letters for the future Commissioners suggests that the recent intervention of Mario Draghi on Europe’s competitiveness has been agenda-setting for the policy priorities as defined by Commission President Ursula von der Leyen. 

Project Beethoven allocates €2.51 billion to “…strengthen the Dutch chip industry and support the future growth of activities in the Brainport Eindhoven hub.”, “…investment in vocational and professional talent, and in sufficient space, good accessibility and affordable housing…”.  

The September 2024 state elections in Germany mark a low point in public support for the governing left-wing coalition and a high point for the populist right. Often overlooked, the elections might also mark the fading of the German socialist party Die Linke into political irrelevance. Its demise teaches us valuable lessons for modern European politics

The report on The Future of European Competitiveness presented by Mario Draghi provides a clarion call for economic reforms to stop Europe’s relative decline.  This short comment cannot do justice to the report with over 300 pages of supporting material.  We will concentrate just on two key messages regarding innovation and investment.

If Trump is elected in November 2024, the security outlook of Europe could deteriorate very fast as Russia may attempt to seek the opportunity of taking NATO off balance. It is therefore essential that the Commission and the forthcoming Defence Commissioner begin the policy planning and design well in advance and preferably as soon as they take office, as to move past preliminary negotiations and have blueprints ready for approval should the situation require it.

In June 2024, the EU has unleashed a powerful weapon in its arsenal against money laundering and terrorist financing: a comprehensive package of new rules designed to close loopholes, enhance transparency, and strengthen enforcement.

Identifying the appropriate level of spending is difficult and there is not really any science about this. This is because different considerations play a role, including military strategy to political psychology.

There are lessons to be learned by comparing the most recent elections in France and the UK. The French electoral system is characterized by two-turn constituency elections where several short-listed candidates qualify for a second round should no-one reach more than 50% of the votes in the first round. The British system, conversely, assigns a given constituency seat to whoever wins the plurality in a given constituency, regardless of whether or not the candidate reaches 50%.

While defense procurement and production remain fragmented across Europe and the EU and its member states invest less in their security and defense than the US, new EU and EU-sponsored initiatives demonstrate that Europeans are aware of this and attempt to reduce these shortcomings – political and fiscal obstacles notwithstanding.

A key area of frustration for voters on both the left and the right is the poor performance of the NHS. With ever-longer waiting lists for hospital appointments and declining local services, voters are deeply concerned about the state of their beloved health service. 

European politics has become more fragmented which makes governing a tall task, but also makes the EU more political. After decades of being perceived as too technocratic and distant, the fight for the European Union’s top jobs became more highly anticipated and much more political. 

The latest European Defence Industrial Strategy outlines a commitment to support investments by Member States and the European defence industry in the development and market introduction of cutting-edge defence technologies and capabilities. 

EU firms should be able to satisfy a large share of the increases in defence expenditure that are required immediately to support Ukraine and also those in the medium and longer-term

The European Sovereign Bond market gyrations erupted in the wake of President Emmanuel Macron’s call for a snap parliamentary vote after his party’s defeat to Marine Le Pen’s National Rally in the European elections have sparked a debate on the opportunity of an activation of the Transmission Protection Mechanism (TPI). 
 

Europeans want policymaking that is culturally more conservative, for example, better protection of external borders and more priority on the wellbeing of European natives rather than third-country immigrants.

Imposing such high tariffs on BEVs from China without any evidence of damage to EU industry does not make sense and will only backfire on the ability of EU industry to export their own cars.

It is therefore possible that even the election of the Commission President will not change the overall picture, with the real game taking place whenever the European Parliament is called to vote on the fundamental choices that Europe will face in the coming years, from managing the digital and green transitions to fundamental decisions on the common defense and security policies.

The elections for the European Parliament of June 6-9 had a clear winner, the extreme right, and also a clear loser, the economy.

After decades of being perceived as too technocratic and distant, the fight for the European Union’s top jobs has become highly anticipated and much more political 

"I live in Milan, I vote for Europe." This is the name of the initiative through which the Municipality of Milan, the European Parliament, and the Institute for European Policymaking at Bocconi University worked together to chat with Milanese residents about Europe.

C’è una sorta di meccanismo “Comma 22” che alle elezioni europee si declina così: i giovani sentono la politica come distante dai loro problemi e per questo votano meno, ma proprio perché votano meno la politica dà loro meno peso. Come si risolve?

 Aging is quite possibly bringing havoc to social security systems across the rich World. It is happening slowly, but it is destiny

There is a large positive effect of new membership to the EU without cost to previous members. The EU enlargement seems to be a positive sum game.

In our first forecast for the EP 2024 elections based on our model, in January 2024, we predicted a “sharp right turn”.  In our latest forecast, and our final one before the election, we are still forecasting that the next EP will be considerably more right-leaning than the current one, and that the two groups to the right of the EPP will be considerably larger than they currently are.

The Fed and the ECB conducted monetary policy reviews in 2019-2020, when most of the above shocks were still in the making or yet to come. Both of them seem largely obsolete today, or at least incomplete. There is no appetite to restart them. 

ASML has a global monopoly on EUV, the most advanced lithography technology that is on the Wassenaar Arrangement list of dual-use technologies and requires an export license. The Dutch government approved the export license of EUV-technology to China in 2018. The US government was not pleased and tried to press its ally to consider the security issues. 

Whatever one thinks of the European project, a collision course with Brussels is not only a waste of time, but will also likely undermine the Dutch position in the world.

These findings stem from a survey conducted in December 2023, encompassing nearly 13,000 EU citizens. Our dataset is representative of the EU as a whole and, more specifically, of Belgium, France, Germany, Italy, the Netherlands, Poland, and Spain. In Italy, we interviewed 1,325 citizens. 

The U.S. Supreme Court will soon rule on three cases with important implications for the ability of social networks to moderate content, particularly when it comes to disinformation and political propaganda. These developments may also have an impact in Europe

With many new restrictive measures in place one would have expected trade to fall.  However, the most one can say is that globalisation has turned into slowbalisation. 

Elisabeth Braw, a widely respected expert in international relations and security, is currently a senior fellow at the Atlantic Council, a think tank based in Washington, D.C. Before transitioning to research, she was a journalist, a background that informed her recent book published by Yale University Press, titled Goodbye Globalization: The Return of a Divided World.

European automakers currently face increasing pressures. While the region’s manufacturers long dominated global sales revenues, several competitors from Asia have recently moved into the top ten.  But European companies have faced similar difficulties before, and the responses of the region’s automakers and policymakers to previous challenges offer insight for the present, especially on the issues of global competition and energy transition.  

It is now over two years since Russia launched its brutal full-scale invasion of Ukraine. Ever since those early days, a broad network of CEPR economists has been working intensively with colleagues in Ukraine and across the international research and policy communities to explore how to tackle the big economic challenges of the war and how to plan for the country’s post-war reconstruction. 
 

The concept of green backlash has recently become more salient in the news, in part due to the widespread farmers’ protests held in a number of European countries. However, there is so far not much robust empirical evidence of an electoral penalty against governments that implement ambitious climate policies.

The EU-sponsored Eurobarometer polls routinely estimate support for EU defence integration between 70% and 80% of respondents, while a recent poll by the independent Bertelsmann Stiftung polling branch, Euopinions, returned a 87% support level. However, the devil is in the details: what is meant by “European defence policy” can wildly differ between people, and these simple questions present no trade-offs. 

The pattern of macroeconomic catch-up seen in the EU’s enlargement process is a remarkably positive story - if largely unsung and still incomplete. The catch-up achieved so far constitutes a key backdrop to today’s debate about further enlargement.  Without the rapid growth of the most recently acceding states it would be impossible for the EU to contemplate taking further poor members.

Why have energy and goods prices followed the traditional trajectory – first up, then down – but the services sector has remained plagued by inflationary pressures?

There's a prevailing skepticism regarding whether existing competition laws are equipped to curb the tendency of AI to foster prices above competitive levels, as these laws were originally crafted to target explicit collusion between companies

The euro area has been subject to a series of very different shocks, some of which, such as the COVID-19 pandemic, were unprecedented. While the ECB’s reaction to these deflationary shocks was vigorous, it persisted too long with its expansionary measures and failed to see their inflationary impact when energy prices shot up. The future is likely to bring new challenges, but climate change might not be the most important threat to price and financial stability.

This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 15 February 2024.

If the EU (and other rich countries) is genuinely interested in tackling climate change, it has to ensure that adequate funding is available for adaptation and loss and damage. It can then justifiably expect all countries to pitch in with mitigation.

Italy must be compliant ex post, and not only ex ante, with the new fiscal rules if it intends to guarantee the long-term sustainability of its public debt.

The current EU natural gas price cap on gas does not lower TTF volatility, fails to prevent price spikes, and has no significant impact on lowering inflation and commodity market volatility.

The climate diplomacy surrounding the COP28 summit has taken center stage in the inaugural session of the working lunch series organized by the Institute for European Policymaking in collaboration with the European Council on Foreign Relations and the SDA Bocconi School of Management. 

A key factor that policy often overlooks is substitutability. Almost every raw material has substitutes. A combination of substitution and some stock piling would be sufficient to de-risk the supply of raw materials to a large extent.

On December 200,2023, The European Parliament and the Council agreed on five key proposals of the New Pact on Migration and Asylum proposed by the EU Commission in September 2020 and aimed at creating a uniform system of regulations and policies around migration and asylum for the EU. The main aim of the new pact was to replace the Dublin system which relied heavily on first-country-of-entry criteria creating a burden for frontline member states.

Without a serious change in the regulations, or a substantial investment in the bureaucratic capacity and the infrastructure for migrants, Dublin is bound to be more real on paper than in practice and many ports of entry are likely to remain in a constant state of emergency.

While increased bureaucratic documentation might make the European AI research landscape less appealing, better documentation will likely result in more thorough and potentially meaningful research.

The new framework has a higher degree of built-in flexibility. By tailoring fiscal adjustment to the situation of individual countries, the reform overcomes one major issue with the previous set of rules – namely the excessive use of flexibility clauses and overlays, to soften the otherwise too strict uniform adjustment paths.

In the absence of crystal-clear considerations to be drawn on the legal domain, it is advisable to refrain from celebrating the AI Act (as well as its alleged substantial failure) as a turning point or a historical achievement. Let the final legal provisions speak, first.

The Council and High Representative for foreign Affairs must ensure that Common Foreign and Security Policy do not deprive individuals of their rights, and must, as a matter of EU constitutional law, include in all instruments a jurisdictional clause indicating the national court responsible to ensure effective judicial protection.

If the European Union wants to have a global economic weight, it must equip itself with great European banking champions capable of attracting capital globally and able to support Europe as a development platform.