Week Ahead (16 March)

W/C Monday, 16 March – European Parliament to decide whether to proceed with vote on EU-US trade framework

The European Parliament will determine this week whether to move ahead with a vote on the ratification of the EU–US trade framework agreement concluded in July 2025 between Ursula von der Leyen and Donald Trump. Negotiators from the Parliament’s political groups will meet on 17 March to assess whether the vote scheduled for 19 March should proceed or be postponed again.

However, the ratification process has become increasingly uncertain following the US Supreme Court ruling on 20 February that invalidated the Trump administration’s “Liberation Day” reciprocal tariffs imposed under the International Emergency Economic Powers Act. The judgement removed the legal basis for a large share of those measures, prompting the administration to rapidly introduce new tariffs under alternative legal authorities.

Although the ruling did not eliminate US protectionist measures entirely, as duties imposed under Section 232 and Section 301 remain in force, it has complicated the political context surrounding the agreement. MEPs have questioned whether it makes sense to ratify a framework built around a tariff structure that may continue to evolve as the US adjusts its legal strategy.

The situation has generated frustration in Washington, where officials have warned that delays in ratification could jeopardise the arrangement. US Trade Representative Jamieson Greer criticised the pace of the process earlier this week, stating that “the EU has done approximately zero percent of what they were supposed to do for their trade deal with us.”

Against this backdrop, diplomatic engagement between Brussels and Washington is intensifying. A parliamentary delegation led by Brando Benifei (S&D) and Bernd Lange (S&D) will travel to Washington between 18 and 20 March for meetings with US officials and members of Congress aimed at preserving the agreement.

Within the Parliament, some lawmakers are considering procedural mechanisms that would allow ratification to proceed while mitigating the risks associated with uncertain US commitments. One option under discussion is a “sunrise clause”, which would approve the agreement in principle but delay its entry into force until Washington confirms that it will uphold the core elements of the framework.

The coming week will therefore be decisive in determining whether the Parliament proceeds with the vote or opts for another delay. Either outcome will have important implications for the stability of transatlantic trade relations, which have become increasingly volatile since the return of the Trump administration, given its continued reliance on tariffs as a central instrument of economic policy.

W/C Monday, 16 March – Poland’s standoff over SAFE participation enters critical phase after Presidential veto

The political dispute over Poland’s participation in the EU’s Security Action for Europe (SAFE) defence loan programme is set to enter a decisive phase this week following President Karol Nawrocki’s decision to veto legislation enabling Warsaw to access roughly €43–44 billion in EU-backed loans for defence procurement.

Poland’s parliament approved the legislation last month, making the president’s signature the final step required for the law to enter into force. However, Nawrocki moved ahead of the expected veto deadline and announced yesterday that he would block the bill, declaring in a televised address as ‘’a law that undermines our sovereignty, our independence, as well as our economic and military security.”

As a reminder, the SAFE instrument would make up to €150 billion in EU loans available to member states to support joint defence procurement and military capability development. Given the scale of its rearmament programme, Poland has been widely expected to be the largest potential beneficiary of the scheme.

Nawrocki, who is politically aligned with the Eurosceptic opposition party, Law and Justice (PiS) camp argues that the EU financing mechanism could expose Poland to long-term debt obligations and exchange-rate risks while potentially benefiting Western European defence companies more than domestic industry. He has instead promoted an alternative financing concept, sometimes referred to as “SAFE 0%”, developed with the governor of the National Bank of Poland. The proposal aims to mobilise roughly 185 billion zloty (around €44 billion) for defence spending through domestic financial mechanisms rather than EU borrowing.

Prime Minister Donald Tusk has strongly criticised the veto, arguing that participation in SAFE would support Polish defence manufacturers while allowing Warsaw to sustain its rapid military expansion without placing additional strain on public finances. Tusk has already announced that his government is preparing a “Plan B” to secure access to the EU financing despite the presidential veto and has convened an extraordinary cabinet meeting to assess possible options.

The coming week is therefore expected to be crucial for clarifying the government’s response and whether any alternative pathway exists for Poland to participate in the EU defence funding framework. At the same time, the standoff highlights the increasingly politicised relationship between the presidency and the government ahead of Poland’s next parliamentary elections in 2027.

Wednesday, 18 March – European Commission to unveil ‘’EU Inc.’’ 28th corporate regime as part of Single Market scaling agenda

The European Commission is expected this week to present its long-awaited proposal for a new EU-wide corporate structure, widely referred to as “EU Inc.”, aimed primarily at startups but open to a broader range of companies seeking to operate across the Single Market under a unified framework.

The initiative forms part of the EU’s wider competitiveness agenda and the push to deepen the Single Market by reducing regulatory fragmentation. At last month’s informal retreat on competitiveness, EU leaders stressed the need to create conditions that allow European firms to scale more easily across borders, a central recommendation in the 2024 reports prepared by Enrico Letta and Mario Draghi. The proposed corporate vehicle, often described as a “28th regime” alongside national company law systems, is intended to simplify cross-border company formation and administrative procedures.

One of the most debated aspects of the initiative concerns its legal basis. Although some policymakers, including MEPs, had favoured a directive, the Commission is expected to proceed with a regulation based on Article 114 of the Treaty on the Functioning of the EU, the internal market legal basis. This approach would allow the measure to be adopted by qualified majority in the Council, avoiding the unanimity requirement that would apply under other company-law provisions.

Substantively, the draft introduces a simplified digital formation procedure for companies operating under the EU regime. Founders would be able to establish a company within 48 hours, including required legal and notarial checks, with formation costs capped at €100. Rather than creating a new EU-level company registry, a demand frequently raised by startup groups, the proposal foresees a central EU digital interface that would allow founders to submit documentation through a single portal. The information would then be transmitted to existing national business registers through the Business Registers Interconnection System.

The proposal also introduces a harmonised framework for employee stock option plans. Under the draft text, companies operating under the regime would be able to issue warrants under an EU-wide system, with income from these instruments “taxed only once,” specifically when the shares are sold.

However, some elements remain politically sensitive. The proposal leaves dispute resolution to national courts rather than establishing a dedicated EU-level judicial mechanism, and employee participation rules would continue to follow the legal framework of the country where the company is registered, raising concerns among trade unions about potential regulatory arbitrage.

The initiative sits alongside other measures aimed at strengthening the EU’s economic competitiveness, including ongoing discussions on deepening the Single Market and the forthcoming revision of EU merger guidelines expected later this year, likely in Q2.

Thursday, 19 March – Friday, 20 March – European Council to balance competitiveness agenda with growing concerns over Middle East

EU leaders will gather in Brussels this week for a European Council that was initially expected to concentrate on competitiveness, the Single Market and the Union’s longer-term economic positioning, but which is now set to be heavily shaped by the escalating conflict involving Iran and its spillover effects on Europe.

The formal agenda remains broad, covering Ukraine, the Middle East, competitiveness and the Single Market, the next Multiannual Financial Framework, European defence and security, and migration. Yet in practice, the worsening security and energy situation in the Gulf is likely to dominate leaders’ discussions, given the immediate risks for oil and gas markets, inflation and the broader European economy.

In his invitation letter, European Council President Antonio Costa warned that “the military escalation in the Middle East is causing global instability, and its negative consequences are already being felt in Europe.” This reflects growing concern in Brussels that what had been designed as a strategic discussion on economic renewal is being overtaken by crisis management.

That shift matters politically because the summit was meant to build on the momentum from last month’s informal leaders’ retreat on competitiveness and the Single Market. At that meeting, leaders endorsed a broader push to reduce fragmentation across the internal market, deepen capital markets, cut administrative barriers and create conditions for European firms to scale more effectively. That broader agenda drew heavily on the logic of the Draghi and Letta reports, which argue that the EU’s weak productivity growth and strategic vulnerability stem in large part from its fragmented market structure and limited ability to convert innovation into globally competitive industrial scale.

Competitiveness discussions are therefore still expected to focus on measures to deepen the Single Market, improve investment conditions and strengthen Europe’s industrial base. The recent presentation of the Industrial Accelerator Act will feed into that conversation, particularly as governments debate how far the EU should go in promoting “Made in Europe” preferences, strengthening strategic sectors and reducing exposure to external economic coercion.

However, the Middle East escalation now risks reframing that debate through the lens of energy insecurity. Even though Europe’s direct dependence on Gulf hydrocarbon flows remains limited, the EU is highly exposed to global price movements, especially in LNG markets. Any prolonged disruption affecting the Strait of Hormuz would tighten global supply, push up prices and place further pressure on European industry at a time when concerns over deindustrialisation, high energy costs and weak growth are already central to the competitiveness discussion.

Leaders are also expected to address Ukraine, where attention will focus in part on the bloc’s next sanctions steps against Russia. Diplomats are still working to secure agreement on the 20th sanctions package, while also trying to ensure the rollover of existing sanctions measures that are due to expire. Hungary’s position remains a key variable, and discussions around energy infrastructure, including a potential EU plan for a fact-finding mission linked to damage to the Druzhba pipeline in Ukraine.

Thursday, 19 March – ECB meeting likely to adopt wait-and-see stance as Middle East tensions complicate inflation outlook

The European Central Bank’s Governing Council will meet on Thursday against a significantly altered macroeconomic backdrop, with policymakers now grappling with rising uncertainty stemming from the escalating conflict involving Iran and its potential impact on global energy markets.

At its previous meeting on 5 February, the ECB kept interest rates unchanged, leaving the deposit facility rate at 2.00%. The decision marked the fifth consecutive meeting without a policy move, reflecting the ECB’s assessment that inflation was stabilising close to the 2% target after a prolonged tightening cycle. Inflation data since that meeting broadly supported the view that price pressures are easing, although progress remains uneven. Euro area annual inflation rose slightly to 1.9% in February from 1.7% in January, remaining just below the ECB’s target but reflecting higher services and food prices. Core inflation, which excludes energy and food, accelerated to 2.4%, underscoring the persistence of underlying price pressures even as headline inflation continues to moderate.

However, the most significant change since the February meeting has been the sudden escalation of geopolitical tensions in the Middle East. The conflict involving the US, Israel and Iran has triggered renewed volatility in global oil markets, raising concerns that higher energy prices could once again complicate the ECB’s inflation outlook.

Policymakers have already begun signalling caution. Governing Council member José Luis Escriva said last week that it was “very improbable” that the ECB would take a decision on interest rates at the upcoming meeting, noting that the central bank needs more time to evaluate the economic consequences of the conflict.  Francois Villeroy de Galhau delivered a similar message stating that markets should not expect a rate hike this week despite the increase in uncertainty, stressing that policymakers must “remain calm amid Iran crisis.” He acknowledged that the conflict could lead to “slightly higher inflation” and less growth but added that current projections do not point to a stagflation scenario.

Meanwhile, Joachim Nagel acknowledged that the risk of higher inflation has increased as a result of the energy shock but emphasised that a “wait-and-see approach is appropriate” for now. He nevertheless indicated that the ECB would act decisively if energy price increases were to translate into more persistent inflationary pressures.

For now, the most likely outcome of the meeting is no change in interest rates, with policymakers instead using communication to reinforce their readiness to respond if the situation deteriorates. Officials remain mindful of the ECB’s experience during the 2022 energy shock, when surging oil and gas prices forced a rapid tightening cycle.