Week Ahead (5 May)

W/C Monday, 5 May – Romania braces for second round of Presidential elections following far-right candidate’s victory in the first round 

Romanians returned to the polls on Sunday for the re-run of the country’s first-round presidential election, after the Constitutional Court annulled the original November vote due to security concerns tied to suspected Russian interference. That vote, won by far-right candidate Calin Georgescu, was invalidated after the release of classified intelligence pointing to foreign meddling. Georgescu was subsequently barred from running, setting the stage for a volatile and polarised contest. 

Stepping into the vacuum left by Georgescu, 38-year-old George Simion, leader of the ultranationalist Alliance for the Union of Romanians (AUR), won the first round decisively with over 40% of the vote, confirming his status as an emerging force in Romania’s new political landscape. Simion has built a solid electoral base through anti-establishment rhetoric, fierce opposition to military aid for Ukraine, aligning rhetorically with Donald Trump’s “America First” message.  Even though he denies being pro-Russian, his stances have alarmed Western capitals, and he has promised to appoint Georgescu to a senior role if elected.  

Bucharest Mayor Nicusor Dan, an independent with a technocratic, anti-corruption profile, secured second place with just under 21%, edging out the establishment-backed former senator Crin Antonescu, who finished narrowly behind at 20%. Dan now moves on to face Simion in the 18 May runoff. The centrist camp, though fractured, may now attempt to consolidate behind Dan to prevent a Simion presidency. 

Simion’s victory builds on years of anti-system momentum, with AUR rising rapidly during the COVID-19 pandemic by channelling anti-vaccine and anti-government sentiment. Last year, his AUR party became Romania’s second-largest parliamentary force, with strong support in rural and younger male demographics. While Simion has insisted he supports Romania’s continued EU membership, he has also threatened to defy EU law. His early lead also raises the prospect of another Eurosceptic voice at the EU leaders’ table, one likely to challenge support for Ukraine and complicate consensus on sanctions, defence spending, and enlargement. 

The coming two weeks are likely to be dominated by behind-the-scenes coalition talks and voter outreach by both runoff candidates. Even though Simion enjoys undeniable momentum, his runoff victory is not guaranteed: voter turnout will be critical. The presidency in Romania is constitutionally limited but politically influential. The president appoints the prime minister, nominates key judicial and security officials, commands the armed forces, and represents the country in Brussels and NATO.  Hence, the developments in the coming weeks will not only be critical for Romania but could also have implications for the direction of its foreign policy, given the country’s strategic position for NATO in the Black Sea. 

Tuesday, 6 May – New German coalition to be sworn in 

This week, the new German coalition is set to be sworn, marking the official start of Friedrich Merz’s tenure as chancellor following February’s federal elections and an extended negotiation process. The CDU/CSU-SPD grand coalition was finalised in early April after weeks of talks and was formally approved last week by both party committees, clearing the way for a Bundestag confirmation vote and cabinet appointment process. 

The incoming coalition enters office with a packed agenda. Particularly prominent will be the implementation of the €1 trillion fiscal stimulus package for defence and infrastructure that required a historic constitutional reform to ease Germany’s strict debt brake. The package, passed in March by the outgoing Bundestag, includes a €500 billion infrastructure fund over 12 years and another €500 billion earmarked for defence and digital modernisation, with significant investments channelled through a new Defence Transformation Fund and a national AI and tech strategy. 

The 146-page agreement titled “Responsibility for Germany”, outlines a comprehensive policy programme built around three pillars: economic competitiveness, national security, and technological renewal. To reflect these priorities, the cabinet has been significantly restructured. The CDU/CSU bloc, led by Merz, will control key portfolios such as Foreign Affairs, Economic Affairs and Energy, Interior, Transport, Health, and a newly established super-ministry for Digitalisation, Research and Aerospace. The SPD, despite its historically weak election result, leveraged its role as the only viable coalition partner available to Merz to secure influential ministries including Finance, Defence, Environment and Climate, Labour, Justice, and Development Cooperation. 

Among the CDU’s new appointees are Johann Wadephul at Foreign Affairs, a staunch Atlanticist expected to sharpen Germany’s messaging within NATO; Katherina Reiche at Economy and Energy, who will oversee reindustrialisation and energy security; and Karsten Wildberger, a former tech CEO, who will oversee long-delayed digital reforms at the newly created Digitalisation Ministry.  

On the SPD side, Lars Klingbeil’s appointment as both Finance Minister and Vice Chancellor cements his influence at the heart of the new government. A close partner in coalition talks, Klingbeil is now tasked with overseeing not only the fiscal architecture of the €1 trillion stimulus but also guiding Germany’s broader budgetary stance. 

The new government takes office under mounting external and domestic pressure. The coalition’s ability to deliver on infrastructure upgrades, boost defence capabilities, and stabilise Germany’s economy will shape Berlin’s credibility within the EU and NATO at a time of high uncertainty over the course of transatlantic relations. It must also navigate growing discontent at home: while the coalition has broad parliamentary backing, polling shows the far-right AfD remains on the rise, now polling at 25%, while CDU support has declined since the coalition deal announcement, and Merz’s personal popularity has dropped eight points in the last month. 

The first major external test for Merz’s government will come quickly. A meeting with French President Emmanuel Macron is expected to be held on Wednesday, intended to reset Franco-German cooperation on EU competitiveness, industrial policy, and security. The new German government enters power with a heavy mandate, not just to stabilise, but to transform. 

Thursday, 8 May – Deadline for the European Commission to decide on TPG’s €6.7 billion acquisition of Techem 

This week, the European Commission will rule on whether to approve TPG’s acquisition of German metering and energy efficiency firm Techem, following a short extension to the review process. The original deadline of 23 April was postponed after TPG submitted formal commitments aimed at addressing the Commission’s competition concerns, indicating a Phase I clearance with remedies. 

The deal, announced in October 2024, will see TPG acquire a majority stake in Techem for €6.7 billion, making it the largest transaction to date for the firm’s $19 billion Rise Climate fund. Singapore’s sovereign wealth fund GIC is also investing as a minority partner. The acquisition marks Techem’s third transition between private equity owners since 2008, with Partners Group now exiting after previously acquiring the company in 2018 for €4.6 billion. 

Headquartered outside Frankfurt, Techem operates in 18 countries and has expanded beyond its traditional sub-metering services into energy-efficient building management and decarbonisation solutions. The Commission’s review has focused on TPG’s other investments in the climate tech and real estate IT space, and their potential overlap with Techem’s services, particularly in Germany and the Netherlands, where Techem has a significant footprint. 

The deal reflects the growing interest in climate-related investments and the continuing trend of private equity firms embracing ESG-focused investments. If approved, the deal is expected to close in the next two months, subject to the remaining customary closing conditions. 

Thursday, 8 May – Bank of England to resume rate cuts amid easing inflation and global trade uncertainty 

The Bank of England’s Monetary Policy Committee is widely expected to cut interest rates by 25 basis points at its upcoming meeting on Thursday, marking a return to monetary easing after pausing in March. Markets have fully priced in the move, reflecting a shift in sentiment following softer inflation data, stabilising growth, and rising concerns over global trade uncertainty. 

After trimming rates in February, the Bank opted to hold at 4.5% in March amid internal divisions and upwardly revised inflation forecasts. However, more recent data has strengthened the case for a cut. March CPI inflation came in at 2.6%, below both expectations and the previous month’s 2.8%, reinforcing hopes that price pressures are cooling and easing fears about the need for prolonged tight monetary policy. 

In recent weeks, Governor Andrew Bailey has signalled a more dovish stance in recent remarks, citing heightened global uncertainty linked to US trade policy under President Trump. Speaking last month in Washington, Bailey noted the Bank is “working through” the implications of the US tariff agenda, warning that protectionism poses a “serious risk to growth” for open economies like the UK. He added that “fragmenting the world economy will be bad for growth” pointing to spillover effects even in countries like the UK that are not heavily targeted by the US tariffs. 

This week’s likely rate cut would come despite inflation still sitting above the 2% target and recent BoE projections warning of a potential rise to 3.7% later this year due to energy and utility price increases. However, the latest signals from Bailey, coupled with a downward revision in the IMF’s latest growth forecast (now 1.1% for 2025), suggest the Bank is prioritising economic support in the context of global trade uncertainty.