Week Ahead (7 April)

W/C Tuesday, 7 April – Commission’s likely release of ETS benchmark updates following Market Stability Reserve proposal 

The European Commission may move forward in the coming days with the long-awaited update of ETS benchmarks for the 2026–2030 period, following last week’s publication of targeted amendments to the Market Stability Reserve (MSR). Initial expectations pointed to a release along with the MSR proposal but the benchmark proposal remains under discussion at College level and could still slip toward the end of April. 

Last Wednesday, the Commission already advanced the MSR component of its ETS adjustments, proposing the removal of the reserve’s invalidation mechanism. This would prevent the permanent cancellation of surplus allowances above the 400 million threshold, effectively increasing system flexibility and easing long-term supply constraints. The move reflects a clear policy choice to prioritise liquidity and short-term price stabilisation amid heightened volatility in carbon markets and broader energy cost pressures. 

By contrast, the benchmark update has proven more politically sensitive. Although formally a technical recalibration of free allocation levels, it directly affects industrial cost exposure across sectors and has therefore been subject to intensified scrutiny from member states and industry. 

A draft version circulating in Brussels suggests a relatively pragmatic approach. Early indications point to more moderate tightening in energy-intensive sectors, particularly in parts of the chemicals value chain, while core industrial benchmarks such as steel and cement remain broadly aligned with expectations, implying continued but gradual reductions in free allocation. At the same time, adjustments to horizontal benchmarks (heat and fuel) could partially offset these effects by increasing allocation linked to energy inputs. 

Overall, the emerging package points to a balancing act, focusing on preserving the ETS price signal while limiting additional cost pressure on industry in the current geopolitical and energy context. The delay in formal adoption reflects the political sensitivity of this trade-off, particularly as member states continue to push for measures to mitigate carbon-related cost impacts. 

Looking ahead, the upcoming benchmark update will form part of a broader two-track adjustment of the ETS framework, alongside the MSR reform and a more comprehensive review scheduled for July 2026, which itself remains subject to pressure for acceleration by a growing number of member states. 

W/C Tuesday, 7 April – Commission may issue decision in Google DMA search case amid mounting stakeholder pressure 

The European Commission could move toward a decision this week in its long-running Digital Markets Act (DMA) investigation into Google’s search practices, following recent signals from Competition Executive Vice President Teresa Ribera that “a decision is coming.” Even though timing remains uncertain, the case appears to be entering its final phase after more than a year of intensive engagement. 

The probe, opened in 2024 with preliminary findings in March 2025, focuses on whether Google’s search results page breaches the DMA’s ban on self-preferencing by favouring its own vertical services (e.g. shopping, flights, hotels). Given the central role of search as a gateway to online traffic, the case is widely seen as one of the most consequential early tests of DMA enforcement. 

Over the past 18 months, the Commission has engaged in extensive technical discussions with Google and market participants, including multiple redesign tests of search results. The latest iterations aimed to increase the visibility of rival vertical services, building on earlier proposals to allow third-party platforms to display dedicated result boxes under “objective and non-discriminatory criteria.” 

However, these efforts have so far failed to resolve stakeholder concerns. Last month, a coalition of 18 organisations, including BEUC, publishers and travel tech platforms, in a joint letter called for urgent enforcement, warning that “without a decision… the European Commission’s credibility is on the line” and that “DMA non-compliance cannot be a profitable business strategy for Alphabet.” A separate group representing airlines, hotels and hospitality actors (including Airlines for Europe and HOTREC) has similarly argued that meaningful compliance has not yet been achieved, stressing the need for “fair and non-discriminatory visibility for all.’' From the Commission’s perspective, officials continue to emphasise the technical complexity of the case and the need for thorough fact-finding.  

If adopted, a decision would mark another critical milestone for DMA enforcement, following the inaugural decisions on a set of Meta and Apple cases in April 2025. Gatekeepers found in breach can face fines of up to 10% of global turnover, alongside binding remedies that could significantly reshape how search results are structured and monetised. 

W/C Tuesday, 7 April – Hungary enters final campaign week ahead of general election  

Hungary has entered the final stretch of campaigning this week ahead of its parliamentary elections on 12 April, in what is widely seen as the most consequential vote for the EU this year. After 16 years in power, Prime Minister Viktor Orban faces his most credible challenger to date in 45-year-old Peter Magyar, a former Fidesz insider now leading the Tisza party. 

The outcome carries significance well beyond Hungary. Despite accounting for a relatively small share of the EU economy, Budapest has under Orban emerged as a key disruptor within the bloc, repeatedly leveraging unanimity rules to delay or dilute decisions on sanctions, migration, enlargement and, most recently, financial support for Ukraine. His government has also been at the centre of prolonged rule-of-law disputes with Brussels, leading to the suspension of billions in EU funds. 

Domestically, Orban’s position has been underpinned by structural changes introduced after his 2010 supermajority, including the 2011 constitutional overhaul and the expansion of so-called “cardinal laws”, which require a two-thirds majority to amend. These reforms, alongside electoral redesign, media consolidation and institutional appointments, have created a system that strongly favours the incumbent and complicates any potential transition of power. 

Against this backdrop, the campaign has revolved around both geopolitical and economic themes. Orban has framed the election as a choice between “peace and war,” portraying himself as a guarantor of stability and accusing his opponent of aligning with Brussels and Kyiv. At the same time however, voter concerns appear increasingly focused on domestic issues, including inflation, stagnant growth and pressures on public services. 

Magyar, for his part, has campaigned on an anti-corruption and governance reform platform, pledging to restore relations with the EU and unlock an estimated €18 billion in frozen funding. His party has gained significant traction, particularly among younger and urban voters, and current polling suggests a comfortable lead of roughly 10%, albeit Hungary’s electoral system, which is largely shaped by redistricting and turnout asymmetries, continues to favour Fidesz. 

Importantly, at an EU level, a Magyar victory would not necessarily translate into a sharp policy break with the current government. He is expected to adopt a more constructive tone toward Brussels but his positions on key issues such as migration and Ukraine remain relatively close to those of Orban. For example, he has opposed fast-tracking Ukraine’s EU accession, rejected military support to Kyiv, and indicated he could put enlargement to a referendum.  

Even in the event of a change in government, structural constraints would remain significant. Unless Tisza secures a two-thirds supermajority, which is unlikely, a Magyar-led administration would face major institutional hurdles. Key state bodies, including the Constitutional Court and budget council, remain staffed by Orban-era appointees, while many policy areas can only be altered with supermajority support. This raises the prospect of political gridlock and limited reform capacity in the short term. 

The final days of campaigning are expected to be highly polarised, with turnout likely to play a decisive role. The visit of US vice-President JD Vance to Hungary today is also likely to add an additional geopolitical dimension to the closing stages of the race. Overall, the election will have implications not only for Hungary’s domestic trajectory but also for the EU’s ability to maintain cohesion and decision-making effectiveness at a time of heightened volatility on several geopolitical fronts (e.g. Ukraine, Middle East). 

Wednesday, 8 April – France to unveil updated military planning law with sharp increase in munitions and defence spending 

Tomorrow, the French government is expected to present its revised military programming law (LPM), setting out a significant ramp-up in defence capabilities and spending through 2030. 

The draft reflects a clear shift toward rebuilding and expanding munitions stockpiles, as lessons from Ukraine and the Middle East highlight the rapid depletion of capabilities in high-intensity conflict scenarios. The emphasis on munitions reflects growing concern over preparedness for sustained, high-intensity conflict scenarios.  As Defence Minister Sébastien Lecornu recently put it, “the urgent need, of course, is for munitions’’, pointing to the rapid depletion rates observed in these ongoing conflicts and the need to rebuild stockpiles. 

According to initial indications, the government intends to: 

• Increase loitering munitions (kamikaze drones) by around 400%  

• Increase MU90 and F21 torpedoes by approximately 230%  

• Expand Aster and Mica surface-to-air missile stocks by around 30%  

• Increase Mistral missile stocks by roughly 45% 

Beyond capability targets, the plan also sets out a continued rise in defence spending, reaching €63.3 billion by 2027 and €76.3 billion by 2030, although these allocations will still require annual approval through the budget process. The draft also comes against a broader European push to strengthen defence capabilities amid heightened geopolitical risks, including scenarios of potential confrontation with Russia later in the decade. 

However, the longer-term trajectory remains subject to political uncertainty. With a presidential election scheduled for spring 2027, a future administration may seek to revise or replace the current framework, raising questions within the defence industry over the durability of procurement plans and investment pipelines beyond the current mandate.  

Nevertheless, it is worth pointing out that defence spending in France appears to enjoy broad cross-party support from the centre to the far right of the political spectrum: last month, the likely presidential candidate of the far-right National Rally (RN) said that the country should align with NATO’s revised target of spending 3.5% of its GDP on military expenditure.