EUR News
LAST UPDATE: June 18, 2025
Brussels proposes revamp of controversial securitisation rules
The EU Commission has proposed cutting risk weights for senior tranches by half and easing due diligence and reporting for STS securitisations, aiming to revive a market that is only 17% the size of its U.S. counterpart. Critics fear the move could loosen Basel standards and raise financial instability risks.
Insight
This is a calculated trade-off: stimulating credit and unlocking capital via securitisation versus maintaining rigorous oversight. Regulators now face the task of balancing growth with systemic risk.
EU Proposes Measures to Cut Red Tape for Defense Investment
On June 17, the European Commission unveiled a “Defence Readiness Omnibus” aimed at bolstering the EU’s arms sector. Measures include adding defence readiness as a positive factor in mergers, fast-track 60‑day permits, streamlined defence procurement, and ESG clarity for defence firms—all designed to unclog bureaucracy and attract private investment (ft.com).
Insight
The proposal seeks to activate Europe’s economic potential to rapidly scale its defence industry—balancing bureaucratic simplification with sustainability to address strategic gaps amid the Ukraine war.
Reeves signals UK defence spending will not rise above 2.6% of GDP this parliament
Chancellor Rachel Reeves announced on June 17 at an FT event that UK defence and intelligence spending will peak at 2.6% of GDP by 2027—composed of 2.5% for defence and 0.1% for intelligence. This increase is funded by reallocating money from the foreign aid budget. Any further defence hike would require a mandate from the next parliament. Reeves emphasized this represents the biggest sustained increase since the Cold War. (ft.com)
Insight
Reeves is balancing national security with fiscal responsibility, marking a notable defence budget rise while postponing more ambitious targets until after the 2029 election. This pragmatic allocation frames the UK as a stable partner despite US pressure and strained public finances.
UK automakers cheer US trade deal, as steel tariffs left in limbo
UK automotive industry praised the G7-era trade pact which reduces U.S. tariffs on British cars and aerospace goods. However, 25% steel tariffs remained unaffected, leaving a critical supply chain issue unresolved .
Insight
While automotive exporters gain clarity, the unresolved steel tariffs continue to burden production inputs and inject uncertainty, dampening the agreement’s full potential.
Sweden’s Faltering Growth May Force Another Rate Cut
Sweden’s GDP contracted by 0.2% in Q1 2025, prompting speculation of another Riksbank rate cut after the policy interest rate was already reduced to 2.25% (x.com, reuters.com)
Insight
Weak economic performance and low inflation suggest the Riksbank may need further easing to support growth, highlighting domestic vulnerability amid global trade tensions.
