PARIS — The French Senate laid the groundwork for a dramatic, consequential week of fiscal planning for 2026 on Monday by passing its own version of next year’s state budget rife with spending cuts.   The Senate and France’s more powerful lower house, the National Assembly, must now find a compromise in a process akin to a U.S.-style conference committee set to take place Friday. If that process fails it will considerably diminish the chances of France getting a new budget wrapped by the end of the year. One National Assembly official told POLITICO the meeting will be “make or break.” Political paralysis also prevented France from getting its 2025 state budget passed before the end of last year; Prime Minister Sébastien Lecornu warned in November that a repeat failure was a “danger that weighs on the French economy.” The country is highly unlikely to face a government shutdown similar to what happened in the United States earlier this year, however, as lawmakers can approve a measure carrying the 2025 budget over into next year. But such a stopgap would exacerbate the worrying financial outlook in the European Union’s second-largest economy.   Lecornu managed to secure a consensus on next year’s social security budget, but the state budget is proving more difficult. The National Assembly’s first attempt ended with all but one MP voting against a bill saddled with untenable and sometimes conflicting amendments. The opposition Socialist Party, which backed the social security bill and is in somewhat of a kingmaker position, is leaning toward voting against this version of the state budget because its members feel France’s wealthiest households won’t be subject to sufficient tax hikes, party leader Olivier Faure said last week. 

Top EU diplomat Kaja Kallas said Monday that financing Ukraine via a loan based on Russia’s frozen assets was now looking “increasingly difficult” ahead of a crunch European Council summit on Thursday. Kallas’ warning on the narrowing path to securing a deal on Russia’s immobilized billions came as European leaders gather in Berlin to try to influence the shape of a potential peace deal in discussions with Ukrainian President Volodymyr Zelenskyy and envoys from U.S. President Donald Trump. EU leaders including German Chancellor Friedrich Merz insist that using Russia’s frozen assets is the only credible method for Europe to keep Ukraine financially afloat from next year. But in the run-up to the summit in Brussels, fears are growing that the push could be derailed by opposition from EU states, who are under pressure from both Russia and the United States. While Belgian Prime Minister Bart De Wever has mentioned threats from Russia if Brussels seizes the assets — and Moscow has already taken steps to sue the Belgian bank where most of the cash is held — two senior European officials involved with the loan effort said the U.S. was also pressuring EU states to go against the scheme. “The Americans are not only demanding that Ukraine cede territories Russia did not manage to take, but are also pushing several European countries not to give Ukraine a €210 billion reparations loan,” said one of the senior European officials. According to a leaked U.S.-Russia draft peace plan, Washington intends to direct part of the assets toward U.S.-led reconstruction efforts, and the same European officials said the U.S. had not dropped its basic opposition to Europe using the assets to help Ukraine. Germany’s Merz has already insisted that the Russian assets should not be transferred to America’s economic advantage. Speaking on her way into a gathering of foreign ministers in Brussels, Kallas noted “significant pressure from all sides” over the reparations loan, which she called the “most credible option” to keep Kyiv financially afloat from next year. “This [reparations loan] is what we’re working on. We are not there yet and it is increasingly difficult, but we’re doing the work and we still have some days,” she said. Belgium has long been opposed to using Russia’s frozen assets to help Ukraine, arguing that this would imperil the peace process and expose Brussels to legal retaliation from Russia. In recent days, Italy, Bulgaria and Malta came out against the scheme, while Hungary and Slovakia have previously voiced opposition. Over the weekend, Czechia’s newly-installed prime minister, Andrej Babiš, came out against the loan, saying Prague would not provide any financial guarantees to back up Belgium. The EU doesn’t need unanimous backing to tap the assets following a decision last week to use emergency powers to immobilize the assets indefinitely. A vote by qualified majority could still pass even if all seven countries cited above oppose it, given that a blocking minority requires 35 percent of the EU’s population.  But Kallas said that it would “not be easy” to override Belgium, given that the bulk of the assets are in the country. “I think it’s important that they are on board with whatever we do.” The threats against Belgium appear to be ramping up. A joint investigation by EU Observer, Humo, De Morgen and Dossier Center stated that the chief executive of Euroclear, Valérie Urbain, has been the subject of threats and intimidation from a Russia-sympathizing French banker linked to Euroclear, requiring her to contract private security. In response, former Estonian Prime Minister Kallas said “some countries are more used to the threats presented by Russia than others — but I want to tell you these are only threats. If we keep united, we are much stronger.”

BRUSSELS — Italy is throwing its weight behind Belgium in opposing the EU’s plan to send €210 billion of Russia’s frozen state assets to Ukraine, according to an internal document seen by POLITICO. The intervention by Rome, the EU’s No.3 in terms of population and voting power — less than a week before a crucial meeting of EU leaders in Brussels — undermines the European Commission’s hopes of finalizing a deal on the plan. The Commission is pushing for EU member countries to reach an agreement in a European Council summit on Dec.18-19 so that the billions of euros in Russian reserves held in the Euroclear bank in Belgium can be freed up to support Kyiv’s war-battered economy.  Belgium’s government is holding out over fears it will be on the hook to repay the full amount if Russia claws back the money, but has so far lacked a heavyweight ally ahead of the December summit. Now Italy has shaken up the diplomatic dynamics by drafting a document with Belgium, Malta and Bulgaria urging the Commission to explore alternative options to using the Russian assets to keep Ukraine afloat over the coming years. The four countries said they “invite the Commission and the Council to continue exploring and discussing alternative options in line with EU and international law, with predictable parameters, presenting significantly less risks, to address Ukraine’s financial needs, based on an EU loan facility or bridge solutions.” The four countries are referring to a Plan B to issue joint EU debt to finance Ukraine over the coming years. However, this idea has its own problems. Critics note it will add to the high debt burdens of Italy and France, and requires unanimity — meaning it can be vetoed by Hungary’s Kremlin-friendly Prime Minister Viktor Orbán. The four countries — even if joined by pro-Kremlin Hungary and Slovakia — would not be able to build a blocking minority but their public criticism erodes the Commission’s hopes of striking a political deal next week. While Italy’s right-wing Prime Minister Giorgia Meloni has always supported sanctions against Russia, the government coalition she leads is divided over supporting Ukraine. Hard-right Deputy Prime Minister Matteo Salvini has embraced a Russia-friendly stance and endorsed U.S. President Donald Trump’s plan to end the war in Ukraine. EMERGENCY RULE Offering a further criticism, the four countries expressed skepticism toward the Commission seizing on emergency powers to overhaul the current sanctions rules and keep Russia’s assets frozen in the long-term. Despite voting in favor of this move to preserve EU unity, they said they were wary of then progressing to use the Russian assets themselves. “This vote does not pre-empt in any circumstances the decision on the possible use of Russian immobilised assets that needs to be taken at Leaders’ level,” the four countries wrote. The legal mechanism for long-term freeze is meant to reduce the chance that pro-Kremlin countries in Europe, such as Hungary and Slovakia, will hand back the frozen funds to Russia. Officials claim this workaround undermines the Kremlin’s chances of liberating its assets as part of a post-war peace settlement — and therefore strengthens the EU’s separate plan to make use of that money.   However, the four countries wrote that the legal clause “implies very far reaching legal, financial, procedural, and institutional consequences that might go well beyond this specific case.”

BRUSSELS — Cheap packages entering the EU will be charged a tax of €3 per item from next July, the bloc’s 27 finance ministers agreed on Friday. The deal effectively ends the tax-free status for packages worth less than €150. The flat tax will apply for each different type of item in a package. If one package contains 10 plushy toys, the duty is applied once. But if the shipment also contains a charging cable, another €3 is added. The flood of untaxed and often unsafe goods prompted the European Commission to propose a temporary solution for the packages under €150 a month ago. This “de minimis” rule allows exporters like Shein and Temu to send products directly to consumers, often bypassing scrutiny. The EU has already received more packages in the first nine months of 2025 than in the entire previous year, when the counter hit 4.6 billion. French Finance Minister Roland Lescure called it “a literal invasion of parcels in Europe last year,” which would have hit “7, 8, 9 billion in the coming years if nothing was done.” An EU official told POLITICO earlier this month that at some airports, up to 80 percent of such packages arriving don’t comply with EU safety rules. This creates a huge workload for customs officials, a growing pile of garbage, and health risks from unsafe toys and kitchen items. EU countries have already agreed to formally abolish the de-minimis loophole, but taxing all items based on their actual value and product type will require more data exchange. That will only be possible once an ambitious reform of the bloc’s Customs Union, currently under negotiation, is completed by 2028. The €3 flat tax is the temporary solution to cover the period until then. The rising popularity of web shops like Shein and Temu, which both operate out of China is fueling this flood. France suspended access to Shein’s online platform this month. This €3 EU-wide tax will be distinct from the so-called handling fee that France has proposed as a part of its national budget to relieve the costs on customs for dealing with the same flood of packages. Klara Durand and Camille Gijs contributed to this report.

Russia’s central bank on Friday filed a lawsuit in Moscow against Brussels-based Euroclear, which houses most of the frozen Russian assets that the EU wants to use to finance aid to Ukraine. The court filing comes just days before a high-stakes European Council summit, where EU leaders are expected to press Belgium to unlock billions of euros in Russian assets to underpin a major loan package for Kyiv.   “Due to the unlawful actions of the Euroclear depository that are causing losses to the Bank of Russia, and in light of mechanisms officially under consideration by the European Commission for the direct or indirect use of the Bank of Russia’s assets without its consent, the Bank of Russia is filing a claim in the Moscow Arbitration Court against the Euroclear depository to recover the losses incurred,” the central bank said in a statement. Belgium has opposed the use of sovereign Russian assets over concerns that the country may eventually be required to pay the money back to Moscow on its own. Some €185 billion in frozen Russian assets are under the stewardship of Euroclear, the Brussels-based financial depository, while another €25 billion is scattered across the EU in private bank accounts. With the future of the prospective loan still hanging in the air, EU ambassadors on Thursday handed emergency powers to the European Commission to keep Russian state assets permanently frozen. Such a solution would mean the assets remain blocked until the Kremlin pays post-war reparations to Ukraine, significantly reducing the possibility that pro-Russian countries like Hungary or Slovakia would hand back the frozen funds to Russia. While Russian courts have little power to force the handover of Euroclear’s euro or dollar assets held in Belgium, they do have the power to take retaliatory action against Euroclear balances held in Russian financial institutions. However, in 2024 the European Commission introduced a legal mechanism to compensate Euroclear for losses incurred in Russia due to its compliance with Western sanctions — effectively neutralizing the economic effects of Russia’s retaliation. Euroclear declined to comment.

BRUSSELS — European banks and other finance firms should decrease their reliance on American tech companies for digital services, a top national supervisor has said. In an interview with POLITICO, Steven Maijoor, the Dutch central bank’s chair of supervision, said the “small number of suppliers” providing digital services to many European finance companies can pose a “concentration risk.” “If one of those suppliers is not able to supply, you can have major operational problems,” Maijoor said. The intervention comes as Europe’s politicians and industries grapple with the continent’s near-total dependence on U.S. technology for digital services ranging from cloud computing to software. The dominance of American companies has come into sharp focus following a decline in transatlantic relations under U.S. President Donald Trump. While the market for European tech services isn’t nearly as developed as in the U.S. — making it difficult for banks to switch — the continent “should start to try to develop this European environment” for financial stability and the sake of its economic success, Maijoor said. European banks being locked in to contracts with U.S. providers “will ultimately also affect their competitiveness,” Maijoor said. Dutch supervisors recently authored a report on the systemic risks posed by tech dependence in finance. Dutch lender Amsterdam Trade Bank collapsed in 2023 after its parent company was placed on the U.S. sanctions list and its American IT provider withdrew online data storage services, in one of the sharpest examples of the impact on companies that see their tech withdrawn. Similarly a 2024 outage of American cybersecurity company CrowdStrike highlighted the European finance sector’s vulnerabilities to operational risks from tech providers, the EU’s banking watchdog said in a post-mortem on the outage. In his intervention, Maijoor pointed to an EU law governing the operational reliability of banks — the Digital Operational Resilience Act (DORA) — as one factor that may be worsening the problem. Those rules govern finance firms’ outsourcing of IT functions such as cloud provision, and designate a list of “critical” tech service providers subject to extra oversight, including Amazon Web Services, Google Cloud, Microsoft and Oracle. DORA, and other EU financial regulation, may be “inadvertently nudging financial institutions towards the largest digital service suppliers,” which wouldn’t be European, Maijoor said. “If you simply look at quality, reliability, security … there’s a very big chance that you will end up with the largest digital service suppliers from outside Europe,” he said. The bloc could reassess the regulatory approach to beat the risks, Maijoor said. “DORA currently is an oversight approach, which is not as strong in terms of requirements and enforcement options as regular supervision,” he said. The Dutch supervisors are pushing for changes, writing that they are examining whether financial regulation and supervision in the EU creates barriers to choosing European IT providers, and that identified issues “may prompt policy initiatives in the European context.” They are asking EU governments and supervisors “to evaluate whether DORA sufficiently enhances resilience to geopolitical risks and, if not, to consider issuing further guidance,” adding they “see opportunities to strengthen DORA as needed,” including through more enforcement and more explicit requirements around managing geopolitical risks. Europe could also set up a cloud watchdog across industries to mitigate the risks of dependence on U.S. tech service providers, which are “also very important for other parts of the economy like energy and telecoms,” Maijoor said. “Wouldn’t there be a case for supervision more generally of these hyperscalers, cloud service providers, as they are so important for major parts of the economy?” The European Commission declined to respond.

A minimum tax on the EU’s richest individuals will not discourage innovators and start-up founders from investing in the bloc, prominent economist Gabriel Zucman told POLITICO. “Innovation does not depend on just a tiny number of wealthy individuals paying zero tax,” Zucman said in an interview at this year’s POLITICO 28 event. The young economist has become a household name in France thanks to his proposal to have households worth more than €100 million paying an annual tax of at least 2 percent of the value of all their assets. Critics of the tax warned about the risk of scaring investors out of the EU and that tech entrepreneurs could leave the bloc as they would be forced to pay a tax based on the market value of shares they own in their companies without necessarily having the liquidity to do so. But Zucman rejected “the notion that someone […] would be discouraged to create a start-up, to innovate in AI because of the possibility that once that person is a billionaire, he or she will have to pay a tiny amount of tax” “Who can believe in that?” he scoffed. The “Zucman tax” was one of the key demands by left-wing parties for France’s budget for next year. But the measure has been ignored by all France’s short-lived prime ministers, and rejected by the French parliament during ongoing budget debates. But Zucman is not giving up and still promotes the measure, including at the EU level. “This would generate about €65 billion in tax revenue for the EU as whole,” Zucman insisted.

U.S. President Donald Trump’s top envoy to the EU told POLITICO that overregulation is causing “real problems” economically and forcing European startups to flee to America. Andrew Puzder said businesses in the bloc “that become successful here go to the United States because the regulatory environment is killing them.” “Wouldn’t it be great if this part of the world, instead of deciding it was going to be the world’s regulator, decided once again to be the world’s innovators?” he added in an interview at this year’s POLITICO 28 event. “You’ll be stronger in the world and you’ll be a much better trade partner and ally to the United States.” Puzder’s remarks come as the Trump administration launched a series of blistering attacks on Europe in recent days. Washington’s National Security Strategy warned of the continent’s “civilizational erasure” and Trump himself blasted European leaders as “weak” and misguided on migration policy in an interview with POLITICO. Those broadsides have sparked concerns in Europe that Trump could seek to jettison the transatlantic relationship. But Puzder downplayed the strategy’s criticism and struck a more conciliatory note, saying the document was “more ‘make Europe great again’ than it was ‘let’s desert Europe’” and highlighted Europe’s potential as a partner.

ATHENS — The country that almost got kicked out of the eurozone is now running the powerful EU body that rescued it from bankruptcy. Greece’s finance minister, Kyriakos Pierrakakis, on Thursday beat Belgian Deputy Prime Minister Vincent Van Peteghem in a two-horse race for the Eurogroup presidency. Although an informal forum for eurozone finance ministers, the post has proved pivotal in overcoming crises — notably the sovereign debt crisis, which resulted in three bailouts of the Greek government. That was 10 years ago, when Pierrakakis’ predecessor described the Eurogroup as a place fit only for psychopaths. Today, Athens presents itself as a poster child of fiscal prudence after dramatically reducing its debt pile to around 147 percent of its economic output — albeit still the highest tally in the eurozone. “My generation was shaped by an existential crisis that revealed the power of resilience, the cost of complacency, the necessity of reform, and the strategic importance of European solidarity,” Pierrakakis wrote in his motivational letter for the job. “Our story is not only national; it is deeply European.” Few diplomats initially expected the 42-year-old computer scientist and political economist to win the race to lead the Eurogroup after incumbent Paschal Donohoe’s shock resignation last month. Belgium’s Van Peteghem could boast more experience and held a great deal of respect within the eurozone, setting him up as the early favorite to win. But Belgium’s continued reluctance to back the European Commission’s bid to use the cash value of frozen Russian assets to finance a €165 billion reparations loan to Ukraine ultimately contributed to Van Peteghem’s defeat. NOT TYPICAL Pierrakakis isn’t a typical member of the center-right ruling New Democracy party, which belongs to the European People’s Party. His political background is a socialist one, having served as an advisor to the centre-left PASOK party from 2009, when Greece plunged into financial crisis. He was even one of the Greek technocrats negotiating with the country’s creditors. The Harvard and MIT graduate joined New Democracy to support Prime Minister Kyriakos Mitsotakis’ bid for the party leadership in 2015, because he felt that they shared a political vision. Pierrakakis got his big political break when New Democracy won the national election in 2019, after four years of serving as a director of the research and policy institute diaNEOsis. He was named minister of digital governance, overseeing Greece’s efforts to modernize the country’s creaking bureaucracy, adopting digital solutions for everything from Cabinet meetings to medical prescriptions. Those efforts made him one of the most popular ministers in the Greek cabinet — so much so that Pierrakakis is often touted as Mitsotakis’ likely successor for the party leadership in the Greek press. Few diplomats initially expected the 42-year-old computer scientist and political economist to win the race to lead the Eurogroup after incumbent Paschal Donohoe’s shock resignation last month. | Nicolas Economou/Getty Images After the re-election of New Democracy in 2023, Pierrakakis took over the Education Ministry, where he backed controversial legislation that paved the way for the establishment of private universities in Greece. A Cabinet reshuffle in March placed him within the finance ministry, where he has sped up plans to pay down Greece’s debt to creditors and pledged to bring the country’s debt below 120 percent of GDP before 2030.

BRUSSELS — Russian state assets in Europe could remain permanently frozen under a legal mechanism approved by EU capitals on Thursday. The EU’s ambassadors handed emergency powers to the European Commission to keep €210 billion in Russian state assets blocked until the Kremlin pays post-war reparations to Ukraine, the Danish Council presidency announced on Thursday. It said that ambassadors had “agreed on a revised version of the Art. 122-proposal and approved the launch of a written procedure for formal Council decision by tomorrow around 5 pm.” The decision was taken by a “very clear majority.” The legal mechanism deals a major blow to the Kremlin’s hopes of unfreezing its money as part of a post-war peace settlement — an idea that has been championed by U.S. President Donald Trump but remains unpopular in Europe. The EU’s new emergency powers will remain in place until “Russia ceases its war of aggression against Ukraine, and provides reparations to Ukraine,” according to a legal text, seen by POLITICO, that was backed by the EU’s 27 ambassadors on Thursday afternoon. In a major boost to Ukraine, the legal workaround significantly reduces the chance that pro-Kremlin countries in Europe, such as Hungary and Slovakia, will hand back the frozen funds to Russia. The emergency clause effectively overhauls the current rules, which compel EU countries to unanimously reauthorize the sanctions every six months.  Kremlin-friendly countries are thereby set to lose their power to release the sanctioned money simply by voting “no” on sanctions renewal. Were that to happen after the EU provided an assets-backed loan to Kyiv, the EU’s 27 capitals would be on the hook to repay the loan to Russia. The EU justified the seismic legal change on the grounds that handing back the assets to Russia would wreak havoc on the EU economy — and potentially fuel hybrid attacks by the Kremlin across the bloc. Keeping the assets frozen “is a measure that is appropriate in order to avoid further repercussions of unprecedented magnitude on the economic situation of the Union caused by Russia’s actions,” the Commission wrote in the legal text. The EU executive initially proposed the legal mechanism to strengthen a separate plan to mobilize €210 billion in frozen Russian assets for Ukraine — most of which are held by the Belgian-based Euroclear.  Belgium, however, is opposed to the plan over fears that it will be on the hook to repay the loan if Russia claws back the money. In order to allay Belgium’s concerns, the Commission stripped references to the loan from the legal proposal that was approved Thursday. Giovanna Faggionato contributed to this report.