BRUSSELS — European Commission President Ursula von der Leyen said Thursday that EU governments are already asking Brussels to create a second edition of the bloc’s SAFE defense financing scheme, even before the first one has begun distributing money. Speaking at the POLITICO 28 event, von der Leyen said the EU’s flagship Security Action for Europe loans-for-weapons program has become the runaway success of the bloc’s rearmament push.  “I think the most successful is the €150 billion of the SAFE instrument,” she said. “It is so oversubscribed by the member states that some are calling for a second SAFE instrument.” SAFE is designed to help countries jointly buy arms and ammunition from European industry financed by low interest loans. Countries had to file national procurement plans this fall, and demand has exceeded available funds, the Commission president said. The Commission chief used the appearance to argue that the past year has reshaped the EU’s defense role at unprecedented speed.  “If you look at the last year when it comes to defense, more has happened than during the last decades in the European Union,” she said, pointing to the creation of the EU’s first full-time defense commissioner and the publication of its first defense readiness plan. She contrasted the bloc’s limited defense spending in the previous decade, when only €8 billion was invested in defense on the European level, with the surge now underway. “During the last year, we enabled an investment … of €800 billion till 2030,” she said. Von der Leyen’s acknowledgment that capitals want a “second SAFE” is part of an ongoing push to continue ramping up defensing spending. That is likely to create a major political clash for 2026, when countries will reopen negotiations over the next long-term EU budget as there are calls for defense spending to be 10 times larger than under the current budget. Any effort for countries to borrow jointly to fund defense will also spark pushback from frugal capitals.

LONDON — Scandal-hit Japanese tech firm Fujitsu has lost its grip on a lucrative contract to keep running Great Britain’s post-Brexit border with Northern Ireland, following mounting public pressure, two people with knowledge of the bidding process have told POLITICO. The firm at the center of the Post Office scandal — which saw faulty data from Fujitsu’s Horizon software lead to wrongful theft and fraud convictions of hundreds of innocent Post Office workers — had spearheaded a consortium bid for the £370 million contract to continue running the Trader Support Service (TSS), as reported earlier this year. The contract was awarded to another consortium late last month, according to the two people cited above. The 10-day cooling-off period after the contract was awarded ends on Tuesday. The Fujitsu-led consortium, which includes Liz Truss ally Shanker Singham’s firm Competere, has raked in more than £500 million since 2020 developing and operating the platform, which helps firms navigate the complicated post-Brexit customs arrangements between Great Britain and Northern Ireland under the Windsor Framework. While a new supplier will be taking control of TSS, Fujitsu retains the intellectual property rights to a core part of the existing platform, four people with knowledge of the process — including those cited above — confirmed. This means the new system will have to be built from scratch.  All of those cited in this story were granted anonymity to speak freely. There have been calls for Fujitsu to be stripped of its public contracts while sub postmasters affected by the scandal await full compensation. In August, more than 32 MPs and 44 peers wrote to U.K. Prime Minister Keir Starmer, urging him to block the firm from bidding for control of the TSS platform. In October, the government accepted all but one of the recommendations from Wyn Williams’ inquiry into the scandal, published in July, which concluded that at least 13 people may have taken their own lives after being accused of wrongdoing.  There has also been public scrutiny over the running of TSS. Cabinet Office Minister Nick Thomas-Symonds told lawmakers earlier this year he was investigating industry concerns about the service. “We are concerned to hear reports that the Trader Support Service is not providing a good quality of service,” cross-party peers on the Northern Ireland Scrutiny Committee wrote in an October report. Meanwhile, a report by the Federation of Small Businesses found current support relating to the Windsor Framework — including the TSS — was “falling short of expectations,” with 78 percent of Northern Irish businesses surveyed rating it as either “very poor” or “poor.” A spokesperson for HMRC, which awarded the contract, said: “We follow government procurement rules when awarding contracts, ensuring value for money for taxpayers. All bids underwent a robust evaluation and assurance process, and we will confirm the award in due course.” Fujitsu and Competere did not respond to requests for comment.

BRUSSELS — It’s time for Europeans to stop trailing behind Donald Trump and instead draw up their own peace plan for Ukraine, Defense Commissioner Andrius Kubilius told POLITICO. The EU “needs to be independent or at least be ready to be strong in geopolitical developments, including to have our plans on how peace in Ukraine can be brought and to discuss them with our transatlantic partners,” Kubilius said. The EU is scrambling to respond after the U.S. president’s negotiators — real estate tycoon Steve Witkoff and Trump’s son-in-law Jared Kushner — were in Moscow Tuesday to talk over the latest peace proposal with Russian leader Vladimir Putin. Europe was caught off guard by the 28-point peace plan drafted by Witkoff and Russia’s Kirill Dmitriev, which included a ban on Ukraine’s membership of NATO and a limit on the size of the Ukrainian army. That draft was modified after a desperate intervention by European allies and Ukraine, but there is wariness about yet another Trump-led peace effort. European countries were not represented at the Kremlin during the meeting with Putin, despite Ukraine’s future being crucial to the continent’s security. EU officials worry that even if this new Trump plan doesn’t fly, in a few months, there’ll be a new one.  “Each six months, we’re getting new plans and in some way I feel that we are waiting here to know the plans that will come from Washington this year. The plans should come also from Brussels or from Berlin,” Kubilius said. The defense commissioner argued that it is “very much needed” for Europe to craft its own plan to end the war to secure a seat at the table. “We should have the possibility to discuss two plans: one that is European and another one, maybe, prepared by our American friends,” he said. The aim would be to “find synergies between these two plans and achieve the best outcome.” DEFENSE IS A TOP PRIORITY The former Lithuanian prime minister has been the bloc’s first defense commissioner for a year — a sign of how much has changed in the EU as it wakes up to the threat posed by Russia and ramps up its rearmament efforts, all while the Trump-led U.S. pulls back from the continent. The U.S. has been the linchpin of Europe’s security since the end of World War II, and Kubilius said, “We should always count on Article 5,” referring to NATO’s common defense provision. However, he argued that America’s shift toward the Pacific “is happening.” “The question is whether we need to have some kind of additional security guarantees and institutional arrangements in order to be ready — in case Article 5 suddenly is not implemented,” he said.   He also mentioned recent comments by U.S. NATO Ambassador Matthew Whitaker that Germany might take over NATO’s top military job, rather than keeping it in the hands of an American general. That “is a signal that really Americans are asking us to take care about European defense,” not only from a military point of view but also from an institutional perspective, Kubilius said. The geopolitical shift “pushed Europe to understand that defense is a clear strategic priority, which demands action from our side,” the commissioner said, mentioning some of the EU’s key legislative actions like the €150 billion SAFE loans-for-weapons program aimed at boosting the bloc’s military production. Next year, “we are planning to spend a lot of our efforts on the development of industry,” he said, including a communication on the single market. Defense companies are currently not fully integrated into the single market as governments have an opt-out for national security interests, but that is a cause of the bloc’s fragmented defense industry and is hampering rearmament efforts. Kubilius also said he wants to open a discussion on “institutional defense readiness,” including revamping the bloc’s mutual defense provision — often overshadowed by NATO’s more muscular promise. The EU clause needs procedural language that spells out the actions member countries must take to protect each other.

BRUSSELS — U.S. Deputy Secretary of State Christopher Landau on Wednesday slammed European NATO allies for prioritizing their own defense industry over American arms suppliers, according to three NATO diplomats. The intervention came during Wednesday’s meeting of NATO foreign ministers — which was skipped by Landau’s boss Marco Rubio. Landau, a longtime NATO skeptic who spoke first at the closed-door meeting, told ministers not to “bully” his country’s defense firms out of participating in Europe’s rearmament. He then left the room soon after for other meetings, the diplomats said, though they noted that ministers only staying for a short time was not unusual. A U.S. State Department official said: “Deputy Secretary Landau delivered two key messages. One is the is the need for Europe to turn its defense spending commitments into capabilities. The second is that protectionist and exclusionary policies that bully American companies out of the market undermines our collective defense.” The EU has moved to scale up its historically depleted defense industry amid growing warnings by countries like Germany that Russia could attack Europe by the end of the decade. Brussels has unveiled strategies in several legal proposals seeking to encourage local industry. Those efforts include the new €150 billion loans-for-arms SAFE program, but third countries like the U.S. can only supply a maximum of 35 percent of the value of weapons systems. Landau’s broadside is the latest in a long list of blows by the current U.S. administration to its historic partners, which includes pressuring the EU into accepting a humiliating trade deal to stave off tariffs. President Donald Trump has repeatedly slammed the bloc for treating the U.S. unfairly — while the EU has said Washington’s demands on trade were tantamount to blackmail.  Landau’s comments are likely to leave a bitter taste in some capitals, coming as several European countries like Germany and Poland announced millions in new cash for a NATO-backed scheme that pays U.S. defense firms to supply critical weapons to Ukraine. In total, Europe and Canada have pledged $4 billion to the scheme, NATO chief Mark Rutte said Wednesday. Trump has in the past questioned NATO’s security guarantees even if he has largely lauded the alliance’s efforts to ramp up defense spending to 5 percent of GDP by 2035. Over the summer Landau posted a deleted social media comment stating, “NATO is still a solution in search of a problem.” Rubio’s absence marks the first time in more than two decades that Washington’s top diplomat hasn’t been present for a NATO ministerial meeting. “No one’s shocked by the U.S. line that Europe shouldn’t be protectionist,” said one NATO diplomat, while adding: “But what did you expect … tact or nuance from the U.S.?” NATO declined to comment. This article has been updated.

Europe’s security does not depend solely on our physical borders and their defense. It rests on something far less visible, and far more sensitive: the digital networks that keep our societies, economies and democracies functioning every second of the day. > Without resilient networks, the daily workings of Europe would grind to a > halt, and so too would any attempt to build meaningful defense readiness. A recent study by Copenhagen Economics confirms that telecom operators have become the first line of defense in Europe’s security architecture. Their networks power essential services ranging from emergency communications and cross-border healthcare to energy systems, financial markets, transport and, increasingly, Europe’s defense capabilities. Without resilient networks, the daily workings of Europe would grind to a halt, and so too would any attempt to build meaningful defense readiness. This reality forces us to confront an uncomfortable truth: Europe cannot build credible defense capabilities on top of an economically strained, structurally fragmented telecom sector. Yet this is precisely the risk today. A threat landscape outpacing Europe’s defenses The challenges facing Europe are evolving faster than our political and regulatory systems can respond. In 2023 alone, ENISA recorded 188 major incidents, causing 1.7 billion lost user-hours, the equivalent of taking entire cities offline. While operators have strengthened their systems and outage times fell by more than half in 2024 compared with the previous year, despite a growing number of incidents, the direction of travel remains clear: cyberattacks are more sophisticated, supply chains more vulnerable and climate-related physical disruptions more frequent. Hybrid threats increasingly target civilian digital infrastructure as a way to weaken states. Telecom networks, once considered as technical utilities, have become a strategic asset essential to Europe’s stability. > Europe cannot deploy cross-border defense capabilities without resilient, > pan-European digital infrastructure. Nor can it guarantee NATO > interoperability with 27 national markets, divergent rules and dozens of > sub-scale operators unable to invest at continental scale. Our allies recognize this. NATO recently encouraged members to spend up to 1.5 percent of their GDP on protecting critical infrastructure. Secretary General Mark Rutte also urged investment in cyber defense, AI, and cloud technologies, highlighting the military benefits of cloud scalability and edge computing – all of which rely on high-quality, resilient networks. This is a clear political signal that telecom security is not merely an operational matter but a geopolitical priority. The link between telecoms and defense is deeper than many realize. As also explained in the recent Arel report, Much More than a Network, modern defense capabilities rely largely on civilian telecom networks. Strong fiber backbones, advanced 5G and future 6G systems, resilient cloud and edge computing, satellite connectivity, and data centers form the nervous system of military logistics, intelligence and surveillance. Europe cannot deploy cross-border defense capabilities without resilient, pan-European digital infrastructure. Nor can it guarantee NATO interoperability with 27 national markets, divergent rules and dozens of sub-scale operators unable to invest at continental scale. Fragmentation has become one of Europe’s greatest strategic vulnerabilities. The reform Europe needs: An investment boost for digital networks At the same time, Europe expects networks to become more resilient, more redundant, less dependent on foreign technology and more capable of supporting defense-grade applications. Security and resilience are not side tasks for telecom operators, they are baked into everything they do. From procurement and infrastructure design to daily operations, operators treat these efforts as core principles shaping how networks are built, run and protected. Therefore, as the Copenhagen Economics study shows, the level of protection Europe now requires will demand substantial additional capital. > It is unrealistic to expect world-class, defense-ready infrastructure to > emerge from a model that has become structurally unsustainable. This is the right ambition, but the economic model underpinning the sector does not match these expectations. Due to fragmentation and over-regulation, Europe’s telecom market invests less per capita than global peers, generates roughly half the return on capital of operators in the United States and faces rising costs linked to expanding security obligations. It is unrealistic to expect world-class, defense-ready infrastructure to emerge from a model that has become structurally unsustainable. A shift in policy priorities is therefore essential. Europe must place investment in security and resilience at the center of its political agenda. Policy must allow this reality to be reflected in merger assessments, reduce overlapping security rules and provide public support where the public interest exceeds commercial considerations. This is not state aid; it is strategic social responsibility. Completing the single market for telecommunications is central to this agenda. A fragmented market cannot produce the secure, interoperable, large-scale solutions required for modern defense. The Digital Networks Act must simplify and harmonize rules across the EU, supported by a streamlined governance that distinguishes between domestic matters and cross-border strategic issues. Spectrum policy must also move beyond national silos, allowing Europe to avoid conflicts with NATO over key bands and enabling coherent next-generation deployments. Telecom policy nowadays is also defense policy. When we measure investment gaps in digital network deployment, we still tend to measure simple access to 5G and fiber. However, we should start considering that — if security, resilience and defense-readiness are to be taken into account — the investment gap is much higher that the €200 billion already estimated by the European Commission. Europe’s strategic choice The momentum for stronger European defense is real — but momentum fades if it is not seized. If Europe fails to modernize and secure its telecom infrastructure now, it risks entering the next decade with a weakened industrial base, chronic underinvestment, dependence on non-EU technologies and networks unable to support advanced defense applications. In that scenario, Europe’s democratic resilience would erode in parallel with its economic competitiveness, leaving the continent more exposed to geopolitical pressure and technological dependency. > If Europe fails to modernize and secure its telecom infrastructure now, it > risks entering the next decade with a weakened industrial base, chronic > underinvestment, dependence on non-EU technologies and networks unable to > support advanced defense applications. Europe still has time to change course and put telecoms at the center of its agenda — not as a technical afterthought, but as a core pillar of its defense strategy. The time for incremental steps has passed. Europe must choose to build the network foundations of its security now or accept that its strategic ambitions will remain permanently out of reach. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Connect Europe AISBL * The ultimate controlling entity is Connect Europe AISBL * The political advertisement is linked to advocacy on EU digital, telecom and industrial policy, including initiatives such as the Digital Networks Act, Digital Omnibus, and connectivity, cybersecurity, and defence frameworks aimed at strengthening Europe’s digital competitiveness. More information here.

BERLIN — Germany’s Bundestag budget committee is planning to sign off on over €2.6 billion in new military programs, according to a confidential list seen by POLITICO. The approvals, set for next week, mark another broad procurement round as Berlin ramps up defense spending and reenergizes its arms industry. The 11-item package includes almost every capability area: drones, long-range missiles, soldier systems, logistics vehicles and critical radar upgrades.  For Chancellor Friedrich Merz’s government, it’s another step toward making the Bundeswehr a war-ready force while giving German manufacturers a steadier pipeline of long-term orders. Some of the biggest checks are being written for drones. MPs will clear about €68 million for Uranos KI, an AI-enabled reconnaissance network built in competing versions by Airbus Defence and Space and German defense-AI company Helsing. Another €86 million will keep the German Heron TP, operated by Airbus DS Airborne Solutions and based on Israel’s Heron TP, flying into the 2030s. Roughly €16 million will go to Aladin, a short-range reconnaissance drone developed by Munich-based start-up Quantum Systems. Air power also gets a significant boost. MPs are set to approve around €445 million for a new batch of Joint Strike Missiles, produced by Norway’s Kongsberg Defence & Aerospace and integrated for Germany’s incoming Lockheed Martin F-35A fleet. Separate contracts worth €37 million will replace obsolete radar components on Eurofighter jets.  NH90 naval helicopters, built by NHIndustries — a consortium of Airbus Helicopters, Leonardo and Fokker — will receive a parallel radar upgrade, as the model returned to headlines after Norway settled a long-running availability dispute with the manufacturer. At the soldier level, the Bundeswehr will move forward with close to €760 million for new G95 assault rifles from Heckler & Koch, nearly €490 million for laser-light modules supplied by Rheinmetall Soldier Electronics, and about €140 million for headset-based communications systems produced by Rheinmetall Electronics with major subcontractors 3M and CeoTronics. And in a sign of Berlin’s effort to rebuild military logistics at scale, MPs will approve roughly €380 million for off-road military trucks from Mercedes-Benz and around €175 million for heavy tank-transport trailers built by DOLL. These contracts directly feed Germany’s defense-industrial base as Berlin pushes industry to deliver at wartime speed.

BRUSSELS — The EU and the U.K. failed to reach a deal on allowing Britain to take part in the bloc’s €150 billion Security Action for Europe loans-for-weapons program, three diplomats told POLITICO today. The negotiations have been very difficult, with London and Brussels clashing on how much the U.K. would have to pay to take part in joint procurements financed by SAFE. The U.K was offering only millions of euros, while the EU slashed its initial request for London to pay between €4.5 billion and €6.5 billion to a lower €2 billion. Head of the Commission’s Directorate-General for Defence Industry and Space, Timo Pesonen, told EU ambassadors this morning that there’s no deal with the U.K., one of the diplomats said. The Commission is also negotiating a similar agreement with Canada. Pesonen said he will inform about the state of play of those talks this afternoon, but that there is more optimist that a deal can be reached with Ottawa.

Talks over British entry into a major EU defense program have been deadlocked for weeks over the question of money. Negotiators might just have found a way out. With a Sunday deadline looming, the two sides are exploring “alternative payment models” to bypass the row over the entry price for London to take part in joint procurements financed by the EU’s €150 billion Security Action for Europe loans-for-weapons program, according to an EU diplomat briefed on the negotiations. A U.K. official, also granted anonymity to speak about the ongoing talks, told POLITICO: “We are trying to find a solution” and “being flexible in our approach.” SAFE is meant to kick-start a European security renaissance, provide independence from the U.S. and give the continent the tools to defend itself against Russian aggression. The EU wants the U.K., with its large defense industry, in the tent. Britain wants in too — predicting benefits for its industry and its security. But so far, they’ve not been able to agree about cash. London has balked at the high price tag Brussels is demanding — ranging from €2 billion to €6.5 billion, but London is offering much less. While details on the alternative models being discussed are still sketchy, one idea is that the U.K. may be able to avoid the ‘sticker shock’ of a high upfront price by signing up to a more ‘pay as you go’ approach that depends on the ultimate level of U.K. participation. It might just be what’s needed to get an agreement over the line. Both sides want a deal by Sunday so that the U.K. is in the room before EU member countries submit their spending plans to the Commission on the same day. Under SAFE, outside countries can only account for a maximum of 35 percent of the value of a weapons system, but the U.K. is negotiating for a higher percentage. Canada is negotiating a similar agreement. A European Commission spokesperson said: “As a partner country, and in line with the SAFE regulation, the UK will contribute financially to take part in SAFE, in addition to an administrative fee. That contribution will reflect the benefits the UK gains from its participation.” A U.K. government spokesperson said the talks “are ongoing,” adding: “The UK is committed to a broad and constructive relationship with the EU, and we are working to implement the package agreed at the UK-EU summit in May.” ‘WE’RE IN THE CONCLUDING PHASE’ The Commission had previously suggested an earlier deadline last week to give member states time to adjust to possible U.K. membership, but London didn’t play ball. Two EU diplomats said the Commission had in recent days started sounding “more hopeful” in its briefings to ambassadors in Brussels, signalling a possible “shifting of gears.” London is hopeful, too. “We think we’re in a concluding phase, working towards Sunday deadline,” the U.K. official quoted above added. Still, the timeline could in theory flex further. One EU diplomat suggested member countries could always tweak their bids after the terms of U.K. participation become clear, even beyond Sunday. “It isn’t ideal,” but could still work, they added. However, the diplomats added that the Commission has consistently made clear in its messaging that SAFE could go ahead without the U.K. if there is no deal. But that outcome is one most in Brussels and London want to avoid. “It’s important for the narrative and future security cooperation — where do you go from here if working with U.K. on defense falls at the first hurdle?” one of the two EU diplomats added. Jacopo Barigazzi also contributed to this report. Update: This article has been updated to include responses from the European Commission and U.K. government.

EU countries are taking a harder look at who builds, owns and works on key infrastructure like ports, IT and rail — and that concern is now spilling into a wave of legislation aimed at countries like China. Sweden is the latest to move, proposing this week to give local authorities new powers to block “hostile states” from bidding on infrastructure if their involvement could threaten national security. “It’s part of a defense issue,” a Swedish official told POLITICO, describing growing worries about countries like China gaining access to public infrastructure. “We are acting very quickly on that, since we see a risk that hostile states might try to infiltrate infrastructure such as ports, but also IT solutions and energy infrastructure.” It’s also a worry in Poland, Austria and inside EU institutions — all of which are rushing to put in safeguards to block, or at least monitor, third-country investment in key tech and transport infrastructure. What accelerated Sweden’s move was a recent EU court ruling involving Turkish and Chinese companies bidding on two railway projects. Judges concluded that suppliers from countries without a free-trade agreement with the EU do not enjoy the same rights as EU firms — a reading Stockholm took as both a green light and a warning signal. Sweden’s new rules are due to take effect in 2027. No specific cases were cited, but the investigation repeatedly pointed to China — which also sits at the center of very similar concerns in Poland. Warsaw has long been uneasy about the scale of Chinese involvement in its ports. A new draft bill put forward by the country’s president would “adapt the existing regulations concerning the operation of ports, and in particular the ownership of real estate located within the boundaries of ports.” The president argued that the current model — state-owned port authorities holding land and infrastructure and leasing it long-term to terminal operators — needs tightening if the country wants to maintain control over assets of “fundamental importance to the national economy.” Gen. Dariusz Łuczak, former head of Poland’s Internal Security Agency and now adviser to the Special Services Commission, told Polish media late last month that “the most important provisions are those concerning the early termination of perpetual use agreements.” However, it’s unclear if the legislation will pass as President Karol Nawrocki is broadly opposed to the government led by Prime Minster Donald Tusk. The EU is also moving. Ana Miguel Pedro, a Portuguese member of the European Parliament with the center-right European People’s Party, told POLITICO in the spring that the growing presence of Chinese state-owned companies in European port terminals “is not just an economic concern, but a strategic vulnerability.” Those concerns appear in the bloc’s new military mobility package, which calls for member countries to put in place “stricter rules on the ownership and control of strategic dual use infrastructure.” Transport Commissioner Apostolos Tzitzikostas also flagged the Chinese presence in ports and said it will feature in the European Commission’s upcoming ports strategy, due in 2026. Austria has also been pushed into the debate after long-distance trains built by Chinese state-owned manufacturer CRRC rolled onto the Vienna-Salzburg line for the first time — triggering a political backlash. The country’s Mobility Minister Peter Hanke said the EU must tighten procurement and digital-security rules for state-backed rail purchases — and Vienna plans to propose new legislation before the end of the year. The Commission did not immediately respond to a request for comment. Industry is pushing Brussels to go even further. The European Rail Supply Industry Association argued that the bloc’s procurement rules are relics of an earlier era and asked the Commission to update them so companies from countries that shut out EU bidders cannot freely compete for European contracts. Sweden’s investigators saw the same risks. “Third-country suppliers without an agreement should not be given a more advantageous position than they have today and than other suppliers have,” Anneli Berglund Creutz, who led the Swedish government’s procurement review, told reporters. Contracting authorities, she added, should have the ability “to take into account the nationality of suppliers and to select suppliers from hostile states” — possibly excluding them “when that protects national security.”

LONDON — The wait is finally over. After weeks of briefings, speculation, and U-turns, Chancellor Rachel Reeves has set out her final tax and spending plans for the year ahead. As expected, there is plenty for policy wonks to chew over. To make your lives easier, we’ve digested the headline budget announcements on energy, financial services, tech, and trade, and dug deep into the documents for things you might have missed.  ENERGY  The government really wants to bring down bills: Rachel Reeves promised it would be a cost-of-living budget, and surprised no one with a big pledge on families’ sky-high energy bills. She unveiled reforms which, the Treasury claims, will cut bills by £150 a year — by scrapping one green scheme currently paid for through bills (the Energy Company Obligation) and moving most of another into general taxation (the Renewables Obligation). The problem is, the changes will kick in next year at the same time bills are set to rise anyway. So will voters actually notice? The North Sea hasn’t escaped its taxes: Fossil fuel lobbyists were desperate to see a cut in the so-called Windfall Tax, which, oil and gas firms say, limits investment and jobs in the North Sea. But Rachel Reeves ultimately decided to keep the tax in place until 2030 (even if North Sea firms did get a sop through rules announced today, which will allow them to explore for new oil and gas in areas linked to existing, licensed sites.) Fossil fuel lobbyists, Offshore Energies UK, were very unimpressed. “The government was warned of the dangers of inaction. They must now own the consequences and reconsider,” it said. FINANCIAL SERVICES Pension tax changes won’t arrive for some time: The widely expected cut in tax breaks for pension salary sacrifice is set to go ahead, but it will be implemented far later than thought. The thresholds for exemption from national insurance taxes on salary sacrifice contributions will be lowered from £60,000 to £2,000 in April 2029, likely to improve forecasts for deficit cuts in the later years of the OBR’s forecasts. The OBR has a markets warning: The U.K.’s fiscal watchdog warned that the price-to-earnings ratio among U.S. equities is reminiscent of the dotcom bubble and post-pandemic rally in 2021, which were both followed by significant market crashes. The OBR estimated a global stock market collapse could cause a £121 billion hike in U.K. government debt by 2030 and slash U.K. growth by 0.6 percent in 2027-28. Even if the U.K. managed to stay isolated from the equity collapse, the OBR reckons the government would still incur £61 billion in Public Sector Net Financial Liabilities. Banks back British investments: British banks and investment houses have signed an agreement with the Treasury to create “invest in Britain” hubs to boost retail investment in U.K. stocks, a plan revealed by POLITICO last week. Reeves also finally tabled a cut to the tax-free cash ISA allowance: £12,000 from spring 2027 (the amount and timings also revealed by POLITICO last week), down from £20,000, with £8,000 slated for investments only. Over-65s will keep the full tax-free subscription amount. Also hidden in the documents was an upcoming consultation to replace the lifetime ISA with a “new, simpler ISA product to support first-time buyers to buy a home.” No bank tax: Banks managed to dodge a hike in their taxes this time, despite calls from the IPPR for a windfall-style tax that could have raised £8 billion. The suggestions (which also came from inside the Labour Party) were met with an intense lobbying effort from the banks, both publicly and privately. By the eve of the budget, City figures told POLITICO they were confident taxes wouldn’t be raised, citing the high rate of tax they already pay and Reeves’ commitment to pushing for growth through the financial services industry. TECH ‘Start, scale, stay’ is the new mantra:  Startup founders and investors were in panic mode ahead of the budget over rumored plans for an “exit tax” on wealthy individuals moving abroad, but instead were handed several wins on Wednesday, with Reeves saying her aim was to “make Britain the best place in the world to start up, to scale up and to stay.” She announced an increase in limits for the Enterprise Manage Scheme, which incentivizes granting employees share options, and an increase to Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) thresholds to facilitate investment in growing startups. A further call for evidence will also consider “how our tax system can better back entrepreneurs,” Reeves announced. The government will also consider banning non-compete clauses — another long-standing request from startups. Big Tech will still have to cough up: A long-standing commitment to review a Digital Services Tax on tech giants was quietly published alongside the budget, confirming it will remain in place despite pressure from the Trump administration. The government will ‘Buy British’ on AI: Most of the government’s AI announcements came ahead of the budget — including plans for two new “AI Growth Zones” in Wales, an expansion of publicly owned compute infrastructure — meaning the only new announcements on the day were a relatively minor “digital adoption package” and a commitment to overhaul procurement processes to benefit innovative tech firms. But the real point of interest on AI came in the OBR’s productivity forecasts, which said that despite the furor over AI, the technology’s impacts on productivity would be smaller than previous waves of technology, providing just a 0.2 percentage point boost by 2030. The government insists digital ID will ultimately lead to cost savings. | Andrea Domeniconi/Getty Images OBR delivers a blow to digital ID: The OBR threw up another curveball, estimating the cost of the government’s digital ID scheme at a whopping £1.8 billion over the next three years and calling out the government for making “no explicit provision” for the expense. The government insists digital ID will ultimately lead to cost savings — but “no specific savings have yet been identified,” the OBR added. TRADE  Shein and Temu face new fees: In a move targeted at online retailers like Shein and Temu, the government launched a consultation on scrapping the de minimis customs loophole, which exempts shipments worth less than £135 from import duties. These changes will take effect from March 2029 “at the latest,” according to a consultation document. Businesses are being consulted on how the tariff should be applied, what data to collect, whether to apply an additional administration fee, as well as potential changes to VAT collection. Reeves said the plans would “support a level-playing field in retail” by stopping online firms from “undercutting our High Street businesses.”  Northern Irish traders get extra support: Also confirmed in the budget is £16.6 million over three years to create a “one-stop shop” support service to help firms in Northern Ireland navigate post-Brexit trading rules. The government said the funding would “unlock opportunities” for trading across the U.K. internal market and encourage Northern Ireland to take advantage of access to EU markets.  There’s a big question mark over drug spending: Conspicuously absent was any mention of NHS drug spending, despite U.K. proposals to raise the cost-effectiveness threshold for new drugs by 25 percent as part of trade negotiations with the U.S., suggesting a deal has not yet been finalized. The lack of funding was noted as a potential risk to health spending in the Office for Budget Responsibility’s Economic and Fiscal Outlook, which was leaked ahead of the budget.