Week Ahead (27 October)

W/C Monday, 27 October – Trade Commissioner Sefcovic to hold follow-up meetings with Chinese officials amid renewed EU-China trade fictions 

On Friday, the European Commission confirmed that a series of in-person high-level meetings between EU and Chinese officials will take place this week, following the Trade Commissioner’s Maros Sefcovic call with Chinese counterpart Wang Wentao last Tuesday. The exchanges come as tensions between Brussels and Beijing deepen over rare-earth export controls, semiconductor supply chains, and reciprocal trade restrictions. 

The discussions will likely centre around Beijing’s tightening of export controls on critical minerals and the EU’s industrial protection measures. Those include the recently proposed steel protection package, slashing duty-free quotas to 18.3 million tonnes a year and introducing a “melt-and-pour” traceability rule to block circumvention via third countries, which has drawn French backing but mixed signals from Berlin. 

Nevertheless, Germany’s own stance seems to be hardening: on Friday, Foreign Minister Johann Wadephul postponed a planned visit to Beijing, citing the lack of substantive meetings on his agenda. Economy Minister Katherina Reiche also announced that Berlin had filed a formal diplomatic protest over Chinese restrictions on chip exports, warning that the “German economy depends on these components.” The move follows months of criticism from Berlin over China’s support for Russia and its activities in the South China Sea. Meanwhile, the Commission’s President Ursula von der Leyen over the week pledged to present a new plan to reduce EU’s dependencies on China for critical raw materials. 

Against this backdrop, this week’s meetings will test the waters of how much room there is for continuous EU-China engagement given the growing economic frictions. 

W/C Monday, 27 October – France enters decisive week of budget talks amid Socialist ultimatum and Zucman tax debate 

France’s 2026 budget negotiations could be reaching a critical point in the coming days, as Socialist Party leader Olivier Faure warned on Sunday that “everything will be decided this week” and that failure to secure an agreement would lead to a motion of censure and possible dissolution of the National Assembly. The key point under discussion is the so-called “Zucman tax”, a proposed levy on ultra-high-net-worth households. 

After weeks of deadlock, Socialist MPs have now introduced a revised, lighter version of the measure — a 3% minimum tax on assets exceeding €10 million, compared to the original 2% rate on assets above €100 million proposed by economist Gabriel Zucman. However, the amendment, revealed by French media on Friday, excludes both family-owned and “innovative” companies from the tax base in an attempt to address government concerns that taxing professional assets could dampen investment and employment. 

Despite these concessions, the government remains firmly opposed. Public Accounts Minister Amelie de Montchalin reiterated on Sunday that “there is no question for us of penalising entrepreneurs and undermining our production capacity by taxing professional goods.” Finance Minister Roland Lescure, currently on a North America trip, has avoided public comment, and the debate on Article 3 of the Finance Bill, which contains the tax amendments, has been postponed until later this week “for scheduling reasons.” 

The postponement only heightens tensions. Faure and other Socialist leaders insist that if their amendment fails, they will withdraw support for the entire budget and back a censure motion, a move that would almost certainly topple the government. This is significant given that Lecornu’s parliamentary arithmetic already depends on Socialist abstentions following his concession to suspend the 2023 pension reform until after the 2027 presidential election, a measure incorporated into the Social Security Financing Bill last week. 

Because Lecornu has agreed not to use Article 49.3 - a clause that allows the government to pass legislation without a vote - as Barnier and Bayrou had tried, every amendment voted by MPs will be included in the text that ultimately goes to the Senate.  This makes the process very complicated.  Les Republicains, although divided, have indicated that they will vote against any text that includes the so called Zucman tax on very high net worth individuals, leaving the government’s margin of manoeuvre increasingly narrow.   

W/C Monday, 27 October – DG COMP to re-open in-depth probe into Universal’s proposed $775 million acquisition of Downtown Music 

The European Commission is expected to restart its in-depth probe into Universal Music Group’s (UMG) $775 million acquisition of Downtown Music this week, ending a nearly two-month procedural suspension triggered by an outstanding information request. The investigation was formally halted on 2 September, when the Commission “stopped the clock” pending key data submissions from the notifying parties. 

The deal, announced in December 2024, would see UMG’s Virgin Music Group take over Downtown’s publishing and royalty services. The Commission opened a Phase II investigation in July 2025, citing concerns the merger could strengthen UMG’s position across recording, publishing, and artist services, limiting access for independents. UMG declined to offer remedies during Phase I. At the time, UMG said it expected to close the deal in the second half of 2025, assuming regulatory clearance. The Commission’s original decision deadline was 10 December 2025, though that will now be extended to reflect the suspension period. 

Independent labels, led by IMPALA and ECSA, argue the merger risks further reducing competition and cultural diversity, with a new submission linking shrinking indie revenues to fewer new releases. UMG counters that its European market share is around 31%, below thresholds for dominance, and that data-access concerns are overstated. 

Once the review restarts, the Commission will hold a state-of-play meeting in early November to discuss market-test results and potential remedies, likely determining whether Brussels moves toward conditional approval or prepares a formal Statement of Objections, extending the process into early 2026. 

Wednesday, 29 October – Dutch general elections to take place, once again expected to lead to a fragmented parliament 

On Wednesday, the Netherlands will hold snap general elections, nearly five months after the collapse of its short-lived right-wing coalition. The vote was triggered after Geert Wilders’ Freedom Party (PVV) withdrew from the government in June, following disputes over a radical anti-immigration plan that included border deployments and the closure of refugee centres. The move ended an already fragile four-party coalition — PVV, BBB, NSC, and VVD,  led by technocrat Prime Minister Dick Schoof, which had lasted only 13 months. 

The PVV remains in the lead but has lost momentum, polling around 34 seats (down from 37 in 2023). Most major parties have ruled out joining a formal coalition with Wilders, making a lengthy formation process likely. Polls suggest the Christian Democrats (CDA) under Henri Bontenbal and the GreenLeft–Labour alliance (GL/PvdA) led by Frans Timmermans are competing closely for second place, each projected at 25–26 seats. The liberal D66 has gained ground to around 16 seats, while the VVD of former Prime Minister and current NATO SG Mark Rutte continues to slide, polling near 15 seats under Dilan Yesilgoz, its weakest result in decades. 

Similar to the elections of 2023, key issues dominating the campaign are housing, healthcare, and immigration. Nearly two-thirds of voters cite housing affordability as their top concern, with the country short of 400,000 homes. The Netherlands is among the EU’s most densely populated member states, and dissatisfaction with affordable housing has fallen sharply,  from 65% in 2017 to 29% in 2024, and only 14% among voters under 30. Cost-of-living pressures and access to healthcare also remain high on the agenda, while the immigration debate continues to polarise voters across party lines. 

Regardless of the outcome, Dutch foreign and EU policy is unlikely to shift significantly, with broad cross-party consensus on support for Ukraine, transatlantic ties, including a more hawkish stance vis-a-vis China after the recent seizure of chipmaker Nexperia, and fiscal caution at EU level. The main focus of the next government will remain domestic, particularly housing, healthcare, and fiscal priorities. 

With at least 15 parties expected to enter parliament and no bloc approaching a majority, coalition negotiations could again be lengthy. Indicatively, the last two government formations took six and nine months, respectively. 

Thursday, 30 October – ECB to hold monetary policy meeting, expected to hold rates steady following latest inflation uptick 

On Thursday, the European Central Bank’s Governing Council (GC) will hold its monetary policy meeting, widely expected to hold its benchmark interest rate unchanged at 2%, for a third consecutive time. The meeting follows the release of September’s minutes, which confirmed the GC’s growing comfort with its current stance, what President Christine Lagarde has repeatedly called a “good place.” 

Eurozone inflation rose to 2.2% in September, its highest in five months, driven mainly by services and energy. Core inflation held steady at 2.3%, suggesting that underlying price pressures remain persistent but contained. The data reinforces the ECB’s cautious approach: while headline inflation has edged slightly above target, there are no signs of a renewed acceleration that would force a policy shift. 

The minutes of the September meeting highlighted a unanimous decision to keep rates on hold amid “elevated uncertainty,” including volatile global trade conditions and geopolitical risks. Members questioned the robustness of growth projections built on a declining household savings rate, arguing that uncertainty could encourage higher precautionary savings and weigh on consumption. 

Recent data continue to show moderate but resilient growth across the euro area. Q2 2025 GDP expanded by 0.4% quarter-on-quarter and 1.5% year-on-year, exceeding expectations. The flash composite PMI for October eased slightly to 50.8 from 51.1 in September, still signalling modest expansion. Industrial production rose 0.6% month-on-month in August, supported by stronger output in Germany and Spain, while retail sales gained 0.3% over the same period. Labour market conditions remain broadly stable, with unemployment at 6.3%, the lowest on record for the bloc. 

Despite these encouraging figures, the ECB remains alert to downside risks, including the delayed impact of US tariffs, the stronger euro, potential fiscal slippage in France due to political instability, and uncertainty around Germany’s stimulus rollout. According to a Reuters poll of 88 economists, all respondents expect the ECB to keep its deposit rate unchanged at 2.00% on 30 October, with nearly three-quarters forecasting no change through 2026. Market pricing similarly reflects a prolonged pause, with derivatives assigning less than a 40% probability of further cuts within the next two years. 

Lagarde said on 30 September that inflation risks remain “quite contained,” and that the eurozone is weathering US trade barriers better than expected. Unless Eurostat’s flash inflation data for October, due the following day (31 October), delivers a major surprise, the ECB is likely to maintain its “wait-and-see” posture well into the first months of 2026.