Week Ahead (30 March)

W/C Monday 30 March – Commission likely to decide on Clarios’ acquisition of Ecobat’s German and Austrian recycling assets  

This week, the European Commission is expected to move toward a decision on Clarios’ proposed acquisition of selected European recycling operations from Ecobat, with the case currently scheduled for a formal deadline of 13 April but potentially concluding earlier under a Phase I review. 

The transaction covers Ecobat’s battery recycling and specialty lead operations in Germany and Austria, including facilities in Freiberg, Braubach and Arnoldstein. These sites focus primarily on the recycling of lead-acid batteries, with the Freiberg plant alone processing up to 75,000 tonnes of battery scrap annually and producing approximately 55,000 tonnes of lead and lead alloys. 

For the US-based Clarios, a major automotive battery manufacturer and owner of the Varta brand, the deal represents a targeted expansion of its European recycling footprint. The acquisition aligns with the company’s strategy to strengthen vertically integrated “closed-loop” capabilities, particularly as regulatory and supply chain pressures intensify across the battery value chain. From Ecobat’s perspective, the divestment forms part of a broader strategic pivot toward lithium-ion battery recycling, reflecting the rapid growth of the electric vehicle segment. 

At EU level, the transaction sits within a supportive regulatory environment for circular economy investments and battery supply chain resilience. The EU’s battery framework includes increasingly stringent recycling and recovery targets, alongside broader efforts to reduce dependence on imported critical raw materials. 

From a competition standpoint, the case is expected to remain manageable despite being reviewed under the standard procedure rather than the simplified track. The overlap between the parties is largely confined to battery recycling activities and geographically limited assets, suggesting a low likelihood of significant horizontal concerns. As such, a Phase I clearance without remedies remains the base case. 

Tuesday, 31 March – Euro area flash inflation to test whether Middle East energy shock is started to feed through into broader price pressures  

Eurostat’s flash inflation estimate of euro area inflation for March, due on Tuesday, will be the next key data point for markets and policymakers assessing whether the energy shock triggered by the Middle East conflict is beginning to alter the ECB’s inflation trajectory ahead of its 29–30 April meeting. The release comes after the Governing Council kept rates unchanged at 2.00% on 19 March, maintaining a wait-and-see stance even as energy markets tightened sharply. 

The backdrop has changed materially since last month’s inflation release. Euro area annual inflation rose to 1.9% in February from 1.7% in January, with services inflation at 3.4%, food, alcohol and tobacco at 2.6%, non-energy industrial goods at 0.7%, and energy still negative at -3.1%. At that stage, the overall picture still broadly supported the ECB’s view that inflation was converging toward target, even if core pressures remained sticky. 

Since then, however, the closure of the Strait of Hormuz and the prolonged disruption to Gulf energy flows have significantly worsened the inflation outlook for Europe. Markets have repriced sharply higher oil and gas costs, and OECD’s revised forecast last week is projecting euro area growth to slow to 0.8% (from the originally projected 1.2%) in 2026 while lifting its inflation forecast to 2.6%, reflecting the persistence of higher energy prices. 

This matters particularly for the euro area because, even though Europe’s direct dependence on Gulf energy flows is lower than that of Asian buyers, it remains highly exposed to global price formation in oil and LNG markets. The EU imports roughly 90% of its oil and gas, leaving it structurally exposed to global price movements even if its direct reliance on Gulf transit routes is relatively limited. Less than 10% of EU gas imports pass through the Gulf, and crude supply is diversified across Norway, the US and West Africa. However, the global nature of oil and LNG pricing means that disruptions in the Gulf - which accounts for around 20% of global oil supply and over 40% of exports - feed quickly into European energy costs. This exposure is amplified by Europe’s increased reliance on LNG following the phase-out of Russian pipeline gas, with LNG now accounting for nearly half of EU gas imports and the US emerging as the dominant supplier. 

The ECB is therefore no longer focused on inflation undershooting or euro strength, as it was earlier this year, but on whether energy-driven price increases begin to spill over into broader inflation expectations, wages and non-energy components. Recent ECB communication reflects that shift: President Christine Lagarde said last week that the ECB is prepared “to make changes to our policy at any meeting” and warned that even a “not-too-persistent overshoot” of the 2% target could justify “some measured adjustment of policy.” Bundesbank chief Joachim Nagel has been even more explicit, calling an April rate hike “an option” and warning that “every passing day contributes to an increase in inflationary risks,” especially if second-round effects begin to emerge. 

That said, the ECB is not yet committed to tightening. A majority of economists surveyed by Reuters still expect rates to remain on hold through 2026, even if markets are now pricing in the possibility of two or three hikes by year-end. Tomorrow’s flash inflation estimate will therefore be watched closely for signs that the energy shock is beginning to move beyond the energy component itself and into a more persistent, medium-term inflation problem. 

Tuesday, 31 March – Thursday 2 April – European Parliament delegation travels to China for first time in eight years amid tensions over e-commerce, overcapacity and market access 

For the first time since 2018, a delegation from the European Parliament will travel to China this week, marking a cautious reopening of parliamentary engagement after years of political freeze driven by pandemic disruptions and bilateral tensions over sanctions and human rights. 

The 9-member delegation from the Internal Market and Consumer Protection (IMCO) committee, led by Anna Cavazzini (Germany, The Greens), will visit Beijing and Shanghai between 31 March and 2 April. The visit is expected to focus heavily on digital markets, e-commerce flows and industrial competition, reflecting the increasingly economic and regulatory nature of EU–China frictions. 

A central priority will be the surge in low-value e-commerce imports into the EU. According to Commission data, 4.6 billion small parcels entered the EU market in 2024, with 91% originating from China, raising systemic concerns around product safety, customs enforcement and regulatory compliance. Lawmakers are expected to press both authorities and platforms on these issues, with Cavazzini stressing that “it is vitally important that the internal market is not overflooded… and that our rules on product standards are to be followed.’’ 

The delegation will meet senior Chinese officials as well as major platforms including Alibaba, Temu, Shein and ByteDance, all of which are under growing regulatory scrutiny in Brussels, especially under the Digital Services Act (DSA). Visits to logistics hubs such as Shanghai Pudong Airport will also focus on how cross-border flows are monitored in practice. 

The trip takes place against a backdrop of rapidly deteriorating EU–China trade balances and intensifying concerns over industrial overcapacity. Latest Eurostat data show the EU’s goods trade deficit with China widening to €359.3 billion in 2025, up nearly 20% from €304.5 billion in 2024, driven by rising imports (+6.3%) and falling EU exports (-6.5%). This reflects a broader shift in Chinese export strategy, with excess production increasingly redirected toward European markets amid weakening domestic demand and US trade barriers. 

This dynamic is already translating into pressure on EU industry, particularly in sectors such as steel, solar, automotive and machinery, reinforcing concerns about a renewed “China shock.” At the same time, the scale of Chinese global overcapacity, with a goods trade surplus approaching $1.2 trillion, speaks volumes of the structural nature of the challenge facing European policymakers. 

Overall, the visit fits within the EU’s evolving “de-risking” strategy: maintaining engagement with China while stepping up enforcement, trade defence and scrutiny of market distortions. Alongside tools such as the Foreign Subsidies Regulation (FSR) and anti-dumping measures (e.g. Electric Vehicles), digital platforms and e-commerce flows are now also emerging as key themes in that approach. 

Wednesday 1 April – Commission expected to advance ETS benchmark update and MSR adjustments amid rising political pressure over energy costs  

The European Commission is expected to move forward by Wednesday  with a set of near-term adjustments to the EU’s carbon pricing framework, including updated Emission Trading System (ETS) benchmarks for the 2026–2030 period and potential changes to the Market Stability Reserve (MSR), as part of a broader effort to address rising political concern over energy costs. 

These measures follow commitments made by Commission President Ursula von der Leyen in a letter to member states on 16 March, in which she pledged targeted interventions to contain price volatility while preserving the integrity of the EU ETS. 

At a technical level, the benchmark update represents a standard routine recalibration of free allocation across sectors. However, in the current context, it has taken on greater significance as one of the few immediate levers available to adjust industrial cost exposure without reopening the ETS Directive. Early indications suggest a relatively moderate tightening for sectors such as chemicals and parts of building materials, while steel benchmarks are expected to remain broadly stable. At the same time, horizontal benchmarks (notably for heat and fuel) could see more substantial reductions, acting as a cross-sector tightening factor. 

In parallel, the Commission is preparing targeted adjustments to the MSR, which plays a central role in shaping carbon prices by regulating allowance supply. Discussions in Brussels have focused on measures that would effectively increase available allowances in the system, including the potential suspension of the MSR’s cancellation mechanism and adjustments to intake rates. Such steps would point to a more flexible approach to short-term price management, with the aim of easing pressure on electricity costs. 

The timing of these interventions is closely linked to the evolving geopolitical backdrop. The escalation of the Middle East conflict and resulting increase in oil and gas prices have intensified concerns among member states about the combined impact of energy costs and carbon pricing on households and industry, especially in case of a prolongation of the war. This has triggered a coordinated push, led by a group of around ten Member States including Italy, Spain, Poland and Greece, for measures to limit ETS-driven cost pressures, particularly in the context of persistently high energy prices. 

It is worth noting that these near-term adjustments are unfolding alongside preparations for a comprehensive review of the ETS framework, formally scheduled for July 2026 but increasingly subject to political pressure for acceleration. Several member states have called for the review to be brought forward, reflecting growing sensitivity around industrial competitiveness and the distributional impact of carbon pricing.