Week Ahead (16 June)

W/C Monday, 16 June – Negotiations on pension reform in France likely to conclude 

In order to persuade the Socialists to abstain on confidence motions associated with the passage of the 2025 budget last February, French Prime Minister Francois Bayrou committed to reopening negotiations on the pension reforms introduced in 2023 which, inter alia, increased the retirement age from 62 to 64. 

Pension negotiations have entered their final stretch, with both unions and employer organisations signalling new flexibility ahead of the conclusion of talks. The negotiations were initially expected to conclude tomorrow, however, Bayrou acknowledged yesterday that talks may need “a few more days” to reach a conclusion. 

In a meeting last Wednesday, Unions hinted that they would be more open to compromise on more targeted measures instead of a return to the retirement age of 62 – previously a red line. However, negotiations remain difficult and while unions and employers could agree, for example, on improving the pensions of mothers or the involvement of social partners in the management of the pension system, there remain many differences on how to otherwise modify the system.  

Even in the case of an agreement, risks remain. At least four major unions would likely need to sign on for the outcome to be seen as politically credible – anything less may not be enough to satisfy the Socialists. Moreover, Bayrou had previously committed to legislating any agreement; over the weekend, he appeared to soften that pledge by stating that “everything will depend on whether or not the agreement includes legislative provisions.”  

The Socialists have made clear that they will not support any no-confidence motion while talks are underway – but this may no longer be the case from this week. They have indicated that they expect Bayrou to fulfil his commitment to presenting a new Bill to implement changes to the pension system and will vote no-confidence in the government should he fail to do.  While a no-confidence vote requires 289 votes, meaning both the National Rally and the Socialists (along with the rest of the Left) would need to back it, the risk is non-negligible. Therefore, the outcome of these negotiations will be critical to French government stability in the coming weeks and months.   

Tuesday, 17 June – Trilogue negotiations on revised FDI screening rules to kick off, following Council’s adoption of position 

Following the European Parliament’s plenary approval in May, Member States’ representatives in Coreper endorsed the Council’s general approach on the reform of the EU’s Foreign Direct Investment (FDI) Screening Regulation last Wednesday. This has cleared the way for trilogue to begin tomorrow. 

The European Commission in January 2024 proposed the reform of the FDI Screening Regulation. It could mark a significant step forward in the EU’s economic security strategy by mandating FDI screening mechanisms in all EU member states. Currently, under the existing rules that entered into force in 2020, the screening regimes are inconsistent across the bloc, with only a subset of countries, namely Italy, France, Germany, Spain, Belgium, and Sweden, screening intra-EU investments, mainly in sensitive sectors such as defence and critical infrastructure.    

The proposed revision of the FDI screening rules should be seen under the prism of shielding the bloc from economic coercion and unfair competition, along with a series of other recent initiatives like the European Chips Act, the Critical Raw Materials Act and the Foreign Subsidies Regulation (FSR) and the Anti-Coercion Instrument.  Substantively, the revised regulation would significantly expand the scope of screening. It mandates automatic review of investments in sectors deemed critical to the EU’s strategic autonomy, such as AI, semiconductors, critical medicines, and financial services. It also closes regulatory loopholes by covering investments made via EU-based entities ultimately controlled by non-EU actors. Crucially, all member states would be required to set up national screening regimes within 15 months, affecting laggards like Greece, Croatia, and Cyprus, which currently lack such systems.  

The file has strong backing from France and Germany, which already operate robust national regimes. However, several more liberal economies, including the Netherlands, Ireland, and some Nordic countries, have expressed concerns about investor deterrence and potential fragmentation of the Single Market. With both institutions now aligned procedurally, trilogues are set to kick off on 17 June. 

Thursday, 19 June – CJEU’s General Advocate to issue legal opinion on Google's Android case 

On Thursday, Advocate General Juliane Kokott of the Court of Justice of the European Union (CJEU) is set to deliver her legal opinion in a landmark antitrust case concerning Google’s appeal against the European Commission’s record €4.125 billion fine over alleged abuses tied to its Android mobile operating system (Case C-738/22 P, Google v. European Commission). The opinion was originally scheduled for last Thursday, but the Court decided to delay it by a week without providing any explanation. 

The case stems from a 2018 Commission decision which found that Google had imposed illegal restrictions on Android device manufacturers and mobile network operators in order to consolidate the dominance of its search engine, with antitrust officials concluding that these restrictions hampered competition and harmed consumers. In particular, the case focused on three types of contracts that Google signed with manufacturers and operators, which, according to the EU’s antitrust officials, helped the company expand its presence to an extent that eliminated competition. These included requiring preinstallation of Google Search and Chrome as a condition for access to the Google Play Store and making payments to manufacturers to preinstall Google Search exclusively. 

Subsequently, the EU’s General Court largely upheld the Commission’s decision in 2022, largely confirming the Commission’s conclusion that ‘’Google imposed unlawful restrictions on manufacturers of Android mobile devices and mobile network operators in order to consolidate the dominant position of its search engine’’. However, the Court argued that the fine should be trimmed by nearly 5% to €4.125 billion, because of a disagreement in the reasoning of one point.  In its appeal to the CJEU, Google claimed that the EU General Court did not adequately establish that the company was guilty of excluding its rivals.   

In the hearing before the CJEU in January, Google’s legal representative stated that Brussels had imposed ‘’the most pro-competitive mobile platform in history with the Commission’s largest ever competition fine’’ and argued that the General Court mistakenly drew a link between Google’s preinstallation agreements with mobile operators and exclusionary effects. Although not legally binding, the Advocate General’s opinion this week is likely to shape the CJEU’s eventual ruling. The final ruling is expected in late 2025, most likely in Q4 2025 based on the usual 4-6 month window between AG opinions and judgements in complex competition cases.  

Thursday, 19 June – EU deadline to rule on UniCredit’s purchase of rival BPM 

Also on Thursday, the European Commission’s DG COMP is expected to issue its Phase 1 decision on UniCredit’s proposed €14 billion all-share takeover of fellow Italian lender Banco BPM, a deal that would reshape Italy’s banking landscape. 

The Commission’s review has focused on whether the merger would significantly reduce competition in certain regional banking markets where UniCredit and BPM both operate. However, it is now widely expected that Brussels will clear the deal with conditions, after UniCredit offered to sell 206 bank branches to address competition concerns. Most of these branches are in northern and north-eastern Italy, where UniCredit and BPM both have a strong presence. 

At national level, the Italian government, invoking its “golden power” investment screening regime, authorised the transaction in April, but only after attaching stringent conditions, citing national security and economic stability concerns. 

The conditions included: 

• Keeping Banco BPM’s loan-to-deposit ratio stable for five years after the merger; 

• Maintaining BPM’s investments in Italian securities linked to Anima Holding, a fund manager BPM recently acquired. 

UniCredit is challenging those national conditions in court, with a hearing set for 9 July. The bank argues that some of the requirements go too far and could limit its future flexibility. If approved by the European Commission by Thursday, the deal would mark a major moment for EU banking consolidation. 

Thursday, 19 June – Bank of England set to hold rates steady this week 

The Bank of England’s Monetary Policy Committee is expected to hold interest rates steady at 4.25% at its meeting on Thursday, as policymakers continue to weigh stubborn inflation data, a weakening labour market, and rising global uncertainty linked to US trade policy. After opting to hold rates in March, the Bank dropped rates by 25 basis points to 4.25% in its previous monetary policy meeting in May. 

Markets had previously priced in the possibility of a summer cut. However, recent developments have led to a more cautious outlook. More specifically, later in May the Office for National Statistics (ONS) revealed that headline CPI inflation rose to 3.5% in April, up from 2.6% in March. Even though the figure was later called into question by the ONS, which revealed that incorrect road tax data had inflated the figure by 0.1 percentage points, the 3.4% rate still represents a significant uptick.  

Meanwhile, the Bank’s own survey of medium-term inflation expectations, which is closely watched as a gauge of future wage and price pressures, remained elevated in May. Expectations for inflation five years ahead held at 3.6%, their highest level since 2019, while 1–2 year expectations remained at 3.2%, signalling persistent caution among households despite easing headline inflation earlier this year. 

Nevertheless, labour market indicators offer a more dovish counterweight. Wage growth has begun to slow and unemployment is edging higher, raising questions about the resilience of the UK economy in the face of tightening global financial conditions. However, the Bank is widely expected to wait for May’s inflation data, due just one day before the rate decision (18 June), before committing to a further move. 

Speaking to MPs earlier this month, BoE’s Governor Andrew Bailey reiterated the Bank’s commitment to a “gradual and careful” approach to easing, with rate cuts likely to follow a quarterly pace at most. He once again flagged that rising global uncertainty, especially over Trump’s trade tariffs, could have opposing effects by either lowering inflation via weaker demand, or driving it up by disrupting supply chains.