LONDON — In February Britain’s cash-strapped Labour government cut international development spending — and barely anyone made a noise. The center-left party announced it would slice the country’s spending on aid down to only 0.3 percent of gross domestic income — from 0.5 percent — in order to fund a hike in defense spending. MPs, aid experts and officials have told POLITICO that the scale of the cuts is on a par with — or even exceeding — those of both the previous center-right Conservative government or the United States under Donald Trump. This leaves Britain’s development arm, once globally envied as a vehicle for poverty alleviation, a shadow of its former self. The move — prompted by U.S. demands to up its NATO spending, and mirroring the Trump administration’s move to gut its own USAID development budget — shocked Labour’s progressive MPs, supporters and backers in the aid sector. But unlike attempted cuts to British welfare spending, the real-world backlash was muted, with the resignation of Britain’s development minister prompting little further dissent or change in policy. There was no mutiny in parliament, and only limited domestic and international condemnation outside of an aid sector torn between making their voices heard — and keeping in Whitehall’s good books over slices of the shrinking pie. Some fear a return grab over the aid budget could still be on the cards — but that the government will find that there is little left to cut. Gideon Rabinowitz, director of policy and advocacy at Bond, the U.K. network for NGOs, warned that, instead of “reversing the cuts by the previous Conservative government, Labour has compounded them, and lives will be lost as a result.” “These cuts will further tarnish the U.K.’s reputation as it continues to be known as an unreliable global partner, breaking Labour’s manifesto commitment,” he warned. “The Conservatives started the fire, but instead of putting it out, this Labour government threw petrol on it.” ‘IT WAS THE PERFECT TIME TO DO IT’ When Prime Minister Keir Starmer announced the cut to international aid — a bid to save over £6 billion by 2027 — Labour MPs, including those who worked in the sector before being elected, were notably silent. The move followed a 2021 Conservative cut to aid spending — from 0.7 percent in the Tory brand-rebuilding David Cameron years down to 0.5 percent. At the time, Labour MPs had met that Tory cut with howls of outrage. This time it was different. Some were genuinely shocked, while others feared retribution from a Downing Street that had flexed its muscles at MPs who rebelled on what they saw as points of conscience. “No one was expecting it, so there was no opportunity to campaign around it,” said one Labour MP. “Literally none of us had any idea it was coming.” Remaining spending is largely mandatory contributions to organizations such as the World Bank. | Daniel Slim/AFP via Getty Images The same MP noted that there are around 50 Labour MPs from the new 2024 intake who had some form of development background before coming into parliament. Yet they were put “completely under the cosh” by Downing Street and government whips. “It was the perfect time to do it,” the MP said. A number of MPs who might have been vocal have since been made parliamentary private secretaries — the most junior government role. “They have basically gagged the people who would be most likely to be outspoken on it,” the MP above said. The department’s ministerial team is now more likely to be loyal to the Starmer project. “I just felt hurt, and wounded. We were stunned. None of us saw it coming,” said one MP from the 2024 cohort, adding: “They priced in that backlash wouldn’t come.” But they added: “If we were culpable so were NGOs, too inward-looking and focused on peripheral issues.” The lack of outcry from MPs would, however, seem to put them largely in step with the wider British public. Polling and focus groups from think tank More in Common suggest that despite the majority of voters thinking spending on international aid is the right thing to do in a variety of circumstances, only around 20 percent of the public think the budget was cut too much.  The second new-intake Labour MP quoted above said the policy was therefore an “easy thing to sell on the doorstep,” and “in my area, there’s not going to be shouting from the rooftops to spend more money on aid.” DIMINISHED AND DEMORALIZED The cuts to aid come at a time when Britain’s Foreign Office is undergoing a radical overhaul. While the department describes its plans as “more agile,” staff, programs and entire areas of focus are all ripe for cuts to save money. The department is looking to make redundancies for around 25 percent of staff based in the U.K. MPs have voiced concern that development staff will be among the first to make the jump due to the government’s shift away from aid. The department insists that no final decisions have been taken over the size and shape of the organization. Major cuts are expected across work on education, conflict, and WASH (Water, Sanitation, and Hygiene.) The government’s Integrated Security Fund — which funds key counter-terror programs abroad — is also looking to scale back work abroad which does not have a clear link to Britain’s national security. The British Council — a key soft-power organization viewed as helping combat Chinese and Russian reach across the world — told MPs it is in “real financial peril” and would be cutting its presence in 35 of the 97 countries it operates. The BBC’s World Service is seeing similar cuts to its global reach. The Independent Commission for Aid Impact (ICAI), the watchdog for aid spending, is also not safe from the ax as the government continues its bonfire of regulators. The FCDO did not refute the expected pathway of cuts. Published breakdowns of spending allocations for the next three years are due to be published in the coming months, an official said. A review of Britain’s development and diplomacy policies conducted by economist Minouche Shafik — who has since been moved into Downing Street — sits discarded in the department. The government refuses to publish its findings. Aid spending was spared a repeat visit by Chancellor Rachel Reeves in her government-wide budget last month — but that hasn’t stopped MPs worrying about a second bite. | Pool Photo by Adrian Dennis via Getty Images The second 2024 intake MP quoted earlier in the piece said that following the U.S. decisions on aid and foreign policy “there was an expectation that the U.K., as a responsible international partner, as a leader on a lot of this stuff, would fill the gap to some extent, and then take more of a leadership role on it, and we’ve done the opposite.” NOTHING LEFT TO CUT Aid spending was spared a repeat visit by Chancellor Rachel Reeves in her government-wide budget last month — but that hasn’t stopped MPs worrying about a second bite. While few MPs or those in the aid sector feel Britain will ever return to the lofty heights of its 0.7 percent commitment, they predict there will be harder resistance if the government comes back for more. “I don’t think they’re going to try and do it again, as there’s no money left,” the second 2024 intake MP said. But they pointed out that a large portion of the remaining aid budget is spent on in-country costs such as accommodation for asylum seekers. Savings identified from the asylum budget would be sent back to the Treasury, rather than put back into the aid budget, they noted. Remaining spending is largely mandatory contributions to organizations such as the World Bank or the United Nations and would, they warned, involve “getting rid of international agreements and chopping up longstanding influence at big international institutions that we are one of the leading people in.” The United Nations is already facing its own funding crisis as it struggles to adjust to the global downturn in aid spending. British diplomat Tom Fletcher — who leads the UN’s humanitarian response — said earlier this year that the organization has been “forced into a triage of human survival,” adding: “The math is cruel, and the consequences are heartbreaking.” The government still has a commitment to returning to 0.7 percent of GNI “as soon as the fiscal circumstances allow.” The tests for this ramp back up were set out four years ago. Britain must not be borrowing for day-to-day spending and underlying debt must be falling. The last two budgets have forecast that the government will not meet these tests in this parliament. FARAGE CIRCLES In the meantime, Labour’s opponents feel emboldened to go further. Both the Conservatives and Reform UK have said that they would further cut the aid budget. The Tories have vowed to slice it down to 0.1 percent of GNI, while Nigel Farage’s Reform UK is eyeing fresh cuts of at least by £7-8 billion a year. A third 2024 Labour MP said that there was a degree of pressure among some colleagues to match the Conservatives’ 0.1 percent pledge. Though no country has gone as far as Uganda’s Idi Amin in setting up a “save Britain fund” for its “former colonial masters,” Britain’s departure on international aid gives space for other countries wanting to step up to further their own foreign policy aims. The space vacated by Britain and America has prompted warnings that China will step in, while countries newer to international development such as Gulf states could try and fill the void. Many of these nations are unlikely to ever fund the same projects as the U.K. and the U.S., forcing NGOs to look to alternate donors such as philanthropists to fund their work. “There’ll be a big, big gap, and it won’t be completely filled,” the second new intake MP said. An FCDO spokesperson said the department was undergoing “an unprecedented transformation,” and added: “We remain resolutely committed to international development and have been clear we must modernize our approach to development to reflect the changing global context. We will bring U.K. expertise and investment to where it is needed most, including global health solutions and humanitarian support.”

The EU will on Thursday unveil plans to supercharge its finance industry, tearing up swathes of rules in a bid to take on Wall Street. The package, which is massive in scope and ambition, would amend at least 10 financial laws to crack down on protectionism and unclog the EU’s financial plumbing. But Brussels’ ambitions to create a U.S.-style financial market will reopen political wounds, especially its plan to create a powerful EU watchdog for financial markets. Despite the bloc’s urgent need for private investment, progress could be bogged down by political divisions over the strategy. “If we’re stuck in a never-ending discussion about how to organize supervision … that will not take us closer to our objective,” Swedish Minister for Financial Markets Niklas Wykman said. The Commission’s overarching goal is to remove barriers to investment in the bloc, allowing more money to flow to struggling businesses so the EU can better keep up with economic powerhouses like the U.S. and China. With national budgets under strain from a bruising pandemic and years of inflation, Brussels is hoping to unlock €11 trillion in cash savings held by EU citizens in their bank accounts to breathe life into the economy. It plans to do that by breaking down technical barriers and busting protectionism between the EU’s 27 national money markets, as well as by changing rules that create national barriers to finance flows and by creating a powerful EU watchdog for financial markets. The EU’s finance chief, Maria Luís Albuquerque, who has led work on the revamp, told POLITICO in an interview: “It’s going to be a difficult discussion, of course, but these are the ones worth having, right?” | Dursun Aydemir/Anadolu via Getty Images Some capitals, though, view the proposal as a power grab and are determined to keep oversight of financial markets at the national level. And there are other tweaks in the package that will dredge up painful recent debates over issues like crypto rules or trading data. Countries are already warning that the Commission should keep its nose out of their business. Sweden, the EU’s best-in-class country for financial markets, has warned the EU executive not to interfere with any rules but instead to focus on boosting the appetite of EU citizens to invest in products like stocks and bonds, rather than parking their cash in savings accounts. Supervision is “not the problem and it’s not the solution to the problem,” Wykman told POLITICO. Among other ideas the Commission was mulling ahead of the official publication — according to documents seen by POLITICO — are a stronger EU-wide public ‘ticker tape’ of trading data, an expanded pilot program for decentralized finance to include all products and crypto firms, and a reduction in paperwork to make it easier to sell investment funds across the EU. The plans are sure to please some industry players, like stock exchanges or central securities-depositary groups that operate in multiple EU countries. But they will also inevitably be opposed by others, such as asset managers who are reluctant to be subject to increased EU oversight, or stock exchanges that don’t want to see their pricey trading data services undercut by a stronger public EU ticker tape. The technical shifts, plus the idea of an EU-wide watchdog, are ambitious but are also reminders of how limited the Commission’s powers are compared those deployed by EU countries at the national level. The Commission can’t make game-changing reforms in areas like national pensions, taxation or insolvency law for businesses, all of which are major obstacles to a single money market. Nor will many national governments spend the political capital needed to make domestic reforms for the sake of the EU economy. Nonetheless, the Commission is sticking to its guns. The EU’s finance chief, Maria Luís Albuquerque, who has led work on the revamp, told POLITICO in an interview: “It’s going to be a difficult discussion, of course, but these are the ones worth having, right?”

LONDON — Financial markets gave a cautious welcome to Chancellor Rachel Reeves’ budget — to the extent that they could make sense of it. The presentation of the U.K. government’s fiscal plans for the next year was badly disrupted when the Office for Budget Responsibility accidentally published its analysis of the bill before Reeves had even announced it in parliament. That forced investors into a frantic search for its key details. As the initial uncertainties lifted, the pound rose by 0.2 percent against the dollar and a little more against the euro, on the key takeaway that the annual tax take will rise by £26 billion by the 2029-2030 fiscal year. That will squeeze the budget deficit and give Reeves more room for maneuver in the event of a fresh downturn. “The Chancellor more than doubled her fiscal headroom from around £10 billion to just under £22 billion,” Deutsche Bank analyst Sanjay Raja said in a note to clients. Such considerations should reduce the U.K.’s vulnerability to swings in global financial markets, which has been exposed more than once in a year when U.S. President Donald Trump has upended the global trading order. Investors had worried all year that a global economic slowdown could push Britain in the direction of a debt crisis. But Reeves now estimates the budget deficit will fall to 1.9 percent of GDP by 2030, from 4.5 percent of GDP in the current year. That will stabilize the debt ratio well below 100 percent of GDP, but at a cost. By freezing income tax thresholds for the rest of this parliament, and by a host of smaller measures, Reeves will raise the overall tax take to a record 38 percent of gross domestic product, according to the OBR. The new debt trajectory generated a measure of relief in bond markets, visible in a drop of 0.05 percentage points in the government’s key 10-year borrowing cost to 4.44 percent by 2 p.m. in London. That was the lowest since the leak of Reeves abandoning her planned increase in income tax rates two weeks ago. It also fed through into slightly stronger expectations of interest rate cuts from the Bank of England. The two-year gilt yield, which closely tracks expectations of the Bank Rate, fell 0.03 percentage points to a 15-month low of 3.74 percent. Reeves was careful to avoid the mistakes of her last budget which, by raising regulated prices sharply, drove headline inflation back to 4 percent over the summer. In her statement on Tuesday, she went in the other direction, freezing rail and bus fares and removing some of the government-directed charges on energy bills. The OBR said these measures would take 0.4 percent off the rate of inflation over the next year. “I have cut the cost of living with money off bills and prices frozen,” Reeves said. Deutsche’s Raja said the measures would have a “modest but meaningful” impact on inflation, making the Bank’s job “slightly easier” for the next 12 months. The Bank of England held off from cutting the key Bank Rate at its latest Monetary Policy Committee meeting this month, despite increasingly signs of the job market weakening. Most analysts had said at the time they would expect a cut in December, as long as the budget didn’t add to inflationary pressures.

LONDON — European officials congratulated themselves on Monday after talks in Geneva suggested Donald Trump will listen to their concerns about forcing a bad peace deal on Ukraine.  “While work remains to be done, there is now a solid basis for moving forward,” European Commission President Ursula von der Leyen said as she hailed “good progress” resulting from “a strong European presence” at the talks. It was certainly “progress” for top advisers from the EU and the U.K. to be invited to join Sunday’s meeting in Switzerland after they were cut out of America’s original 28-point plan, which they feared was so biased it would embolden Russia to launch further attacks.  But the celebration was short-lived.  On Monday evening, Russia rejected the updated text of the deal, which had been redrafted with input from Ukraine and its allies during the lengthy talks with U.S. Secretary of State Marco Rubio.  The risk for Ukraine now is that Vladimir Putin will drag the American president back to his starting position: A 28-point ceasefire agreement that triggered a meltdown among officials in Brussels because it would force Kyiv to give up swathes of land to Moscow, abandon hope of ever joining NATO, and cut the size of its army to 600,000 troops from nearly 1 million.   If that happens, Ukrainian President Volodymyr Zelenskyy will face a miserable choice: Either take the offer cooked up by Trump and Putin, or gamble his country’s future in the hope of one day getting enough help from his European friends.  These are the same friends who, after nearly four years of war, won’t send him their troops, or the weapons he wants, or even raid Russia’s frozen assets from their banks to help him buy supplies of his own.  UNWILLING TO FIGHT For some U.S. Republicans, Europeans who object to Trump’s deal and the compromises it will require are deluding themselves. “What is the alternative?” Greg Swenson, chairman of Republicans Overseas in the U.K., asked POLITICO. “You can talk a good game, you can attend all these diplomatic meetings and you can send all your best people to Geneva, but the only way to beat Putin is to fight — and none of them are willing to do that,” Swenson said. “So it’s all talk. It all sounds great when you talk about democracy and defending Ukraine, but they’re just not willing to do it.” European politicians and officials would disagree, pointing to the huge sums of money and weapons their governments have sent to Kyiv since the war started nearly four years ago, as well as to the economic challenge of cutting back on Russian trade, especially imported fossil fuels. Since the U.S. pulled back on its support, Europe has conspicuously moved to fill the gap. But in truth, Trump’s original proposal panicked officials and diplomats in Brussels and beyond because they knew Zelenskyy could not rely on Europe to do enough to help Ukraine on its own.  European Commission President Ursula von der Leyen said as she hailed “good progress” resulting from “a strong European presence” at the talks. | Nicolas Economou/Getty Images A month ago, EU leaders turned up for a summit in Brussels bullishly predicting they would secure a landmark agreement on using €140 billion in frozen Russian assets as a “reparations loan” to put Kyiv on a secure financial footing for at least the next two years. But in a major diplomatic and political blunder, the plan has fallen apart amid unexpected objections from Belgium.  NO BREAKTHROUGH ON ASSETS Talks are now intensifying among officials in the European Commission and EU governments, especially the Belgians, but there has as yet been no breakthrough, according to multiple officials granted anonymity, like others, to speak candidly about sensitive matters.  Some diplomats hope that the pressure from Trump will force Belgium and those other EU countries with reservations on the frozen assets plan to get on board. One idea that hasn’t been ruled out is to make use of some of the assets alongside joint EU bonds or potentially direct financial contributions from EU governments, officials said.  But some EU diplomats fear the whole idea of a reparations loan to Ukraine using the frozen assets will crumble if the final peace blueprint contains a reference to using those same funds.  The initial blueprint suggested using the assets in an investment drive in Ukraine, with half the proceeds going to the U.S., a concept Europeans rejected as “scandalous.” Yet once sanctions on Russia are eventually lifted, Euroclear — the Belgium-based financial depository holding the immobilized assets — could end up having to wire the money back to Moscow.  This could leave EU taxpayers on the hook to repay the cash, a scenario that is likely to weigh heavily on EU governments as they consider whether to support the loan idea in the weeks ahead.  Then there’s the question of keeping the peace. Earlier this year, French President Emmanuel Macron and British Prime Minister Keir Starmer led efforts to assemble support for an international peacekeeping force from volunteer countries who would form a “coalition of the willing.” A year earlier, Macron even floated the idea of “boots on the ground” before the conflict is over.  He no longer talks like that.  In a sign of how difficult any conversation on sending troops to Ukraine would be in France, an impassioned call last week from France’s new top general, Fabien Mandon, for mayors to prepare citizens for a possible war with Russia sparked an uproar, and drew condemnation from major political parties. Mandon had warned that if France “is not prepared to accept losing its children, to suffer economically because priorities will be given to defense production, then we are at risk.” Macron tried to tamp down the controversy and said Mandon’s words had been taken out of context. French President Emmanuel Macron and British Prime Minister Keir Starmer led efforts to assemble support for an international peacekeeping force. | Leon Neal/Getty Images In Germany, Foreign Minister Johann Wadephul said Berlin was “already making a special contribution to the eastern flank” by stationing a combat-ready brigade in Lithuania. “The entire Baltic region is a key area on which the Bundeswehr will focus. I think that this is also sufficient and far-reaching support for Ukraine.” The Ukrainians would have wanted a deeper commitment on their soil, but Western Europeans are wary of incurring high casualties by sending soldiers to the front lines. “At least Trump is honest about it,” Swenson said. “We could beat Russia. We would beat them, I would think, quickly, assuming there was no nuclear weapons.” “We would beat Russia, but a lot of people would die.” Esther Webber, Gabriel Gavin and Nicholas Vinocur contributed reporting.

As Europe redefines its life sciences and biotech agenda, one truth stands out: the strength of our innovation lies in its interconnection between human and animal health, science and society, and policy and practice. This spirit of collaboration guided the recent “Innovation for Animal Health: Advancing Europe’s Life Sciences Agenda” policy breakfast in Brussels, where leading voices from EU politics, science and industry came together to discuss how Europe can turn its scientific excellence into a truly competitive and connected life sciences ecosystem. Jeannette Ferran Astorga / Via Zoetis Europe’s role in life sciences will depend on its ability to see innovation holistically. At Zoetis we firmly believe that animal health innovation must be part of that equation, as this strengthens resilience, drives sustainability, and connects directly to the wellbeing of people. Innovation without barriers Some of humanity’s greatest challenges continue to emerge at the intersection of human, animal and environmental health, sometimes with severe economic impact. The recent outbreaks of diseases like avian influenza, African swine fever and bluetongue virus act as reminders of this. By enhancing the health and welfare of animals, the animal health industry and veterinarians are strengthening farmers’ livelihoods, supporting thriving communities and safeguarding global food security. This is also contributing to protecting wildlife and ecosystems. Meanwhile, companion animals are members of approximately half of European households. Here, we have seen how dogs and cats have become part of the family, with owners now investing a lot more to keep their pets healthy and able to live to an old age. Because of the deepening bonds with our pets and their increased longevity, the demand for new treatment alternatives is rising continuously, stimulating new research and innovative solutions making their way into veterinary practices. Zoonotic diseases that can be transferred between animals and humans, like rabies, Lyme disease, Covid-19 and constantly new emerging infectious diseases, make the rapid development of veterinary solutions a necessity. Throughout the world, life sciences are an engine of growth and a foundation of health, resilience and sustainability. Europe’s next chapter in this field will also be written by those who can bridge human and animal health, transforming science into solutions that deliver both economic and societal value. The same breakthroughs that protect our pets and livestock underpin the EU’s ambitions on antimicrobial resistance, food security and sustainable agriculture. Ensuring these innovations can reach the market efficiently is therefore not a niche issue, it is central to Europe’s strategic growth and competitiveness. This was echoed at the policy event by Dr. Wiebke Jansen, Policy Lead at the Federation of Veterinarians of Europe (FVE) when she noted that ‘innovation is not abstract. As soon as a product is available, it changes the lives of animals, their veterinarians and the communities we serve. With the many unmet needs we still face in animal health, having access to new innovation is an extremely relevant question from the veterinary perspective.’ Enabling innovation through smart regulation To realize the promise of Europe’s life sciences and biotech agenda, the EU must ensure that regulation keeps pace with scientific discovery. The European Commission’s Omnibus Simplification Package offers a valuable opportunity to create a more innovation-friendly environment, one where time and resources can be focused on developing solutions for animal and human health, not on navigating overlapping reporting requirements or dealing with an ever increasing regulatory burden. > In animal health, biotechnology is already transforming what’s possible — for > example, monoclonal antibodies that help control certain chronic conditions or > diseases with unprecedented precision. Reviewing legislative frameworks, developing the Union Product Database as a true one-stop hub or introducing digital tools such as electronic product information (e-leaflets) in all member states, for instance, would help scientists and regulators alike to work more efficiently, thereby enhancing the availability of animal health solutions. This is not about loosening standards; it is about creating the right conditions for innovation to thrive responsibly and efficiently. Science that serves society Europe’s leadership in life sciences depends on its ability to turn cutting-edge research into real-world impact, for example through bringing new products to patients faster. In animal health, biotechnology is already transforming what’s possible — for example, monoclonal antibodies that help control certain chronic conditions or diseases with unprecedented precision. Relieving itching caused by atopic dermatitis or alleviating the pain associated with osteoarthritis significantly increases the quality of life of cats and dogs — and their owners. In addition, diagnostics and next-generation vaccines prevent outbreaks before they start or spread further. Maintaining a proportionate, benefit–risk for veterinary medicines allows innovation to progress safely while ensuring accelerated access to new treatments. Supporting science-based decision-making and investing in the European Medicines Agency’s capacity to deliver efficient, predictable processes will help Europe remain a trusted partner in global health innovation. Continuum of Care / Via Zoetis A One Health vision for the next decade Europe is not short of ambition. The EU Biotech Act and the Life Sciences Strategy both aim to turn innovation into a driver of growth and wellbeing. But to truly unlock their potential, they must include animal health in their vision. The experience of the veterinary medicines sector shows that innovation does not stop at species’ borders; advances in immunology, monoclonal antibodies and the use of artificial intelligence benefit both animals and humans. A One Health perspective, where veterinary and human health research reinforce each other, will help Europe to play a positive role in an increasingly competitive global landscape. The next five years will be decisive. By fostering proportionate, science-based adaptive regulation, investing in digital and institutional capacity, and embracing a One Health approach to innovation, Europe can become a genuine world leader in life sciences — for people and the animals that are essential to our lives. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Zoetis Belgium S.A. * The political advertisement is linked to policy advocacy on the EU End-of-Life Vehicles Regulation (ELVR), circular plastics, chemical recycling, and industrial competitiveness in Europe. More information here.

Scotland’s new plan to fund big infrastructure projects already has an affectionate name: “kilts.” The country was Wednesday night given the same credit rating as the United Kingdom — paving the way for it to raise funds through the markets on more favorable terms. It’s a bid by Scotland’s pro-independence devolved administration to boost the country’s economic firepower and get big projects off the ground. City of London wags swiftly dubbed the bonds “kilts,” a Scottish-flavored riff on Britain’s own government bonds, known as gilts. “This is a very proud day for Scotland, because we’ve achieved the highest possible credit rating that we could do within the United Kingdom,” Scotland’s First Minister John Swinney said in an interview with POLITICO. “It’s a reflection of the strength of the Scottish economy, the strength of our financial management and the strength of our financial institutions.” The Scottish government will issue its first bonds next year, with a £1.5 billion bond program planned over the life of the next parliament. “The focus of that would be on key capital investment priorities around net zero and housing to make sure that Scotland is equipped for the long-term challenges that we face,” said Swinney. Devolved powers given to Scotland in 2016 — two years after a failed referendum bid to take the country out of the U.K. — allow the issuance of government bonds for capital investment. But both credit agencies which gave Scotland its favorable grade stressed that their ratings could be cut if Scotland moved towards independence from the U.K., something Swinney’s government has long push for. Swinney acknowledged “there will always be context which affects the credit ratings and ratings agencies will assess different dynamics and different factors,” but he said he took “confidence” from the strength of Scotland shown by the ratings. “These are significant sources of assurance, but obviously we’ve got to ensure that we take forward responsible and focused investment programs that strengthen the Scottish economy to deal with any assessments that might change in the years,” he said. Swinney also pointed to political instability in Westminster — where the top of the governing Labour Party is locked in a briefing war amid tumbling poll ratings — as a factor in how Scotland is seen. “As somebody who’s spent a lifetime in politics, I can’t quite fathom who thought the briefing on Tuesday night from Number 10 was a good idea, because it’s just absolutely fueled uncertainty about the prime minister’s leadership,” Swinney — whose party battles Labour in Scotland — said. “We’re operating within the United Kingdom, from which we’re not insulated. Of course we’re not insulated, but we have got fundamental strengths that come out of this analysis, on which I think we can build a really strong economic foundation for the future,” he added.

LONDON — Nigel Farage’s second-in-command called for a rethink of the U.K.’s interest rate-setting committee in a fresh sign that a Reform UK government could intervene in Britain’s independent central bank. Richard Tice, the deputy leader of the populist-right party that’s surging in U.K. polls, told POLITICO in an interview that there should be a debate over potentially sweeping changes to the make-up and role of the Bank of England’s Monetary Policy Committee (MPC).  “It’s not unreasonable to check whether or not we’ve got the membership of the MPC right. I mean, it’s almost 30 years,” he said, referencing the 1997 establishment of the MPC. “So you could say, well, have we got the membership right? Have we got the number of government representatives right? Should they or shouldn’t they have a vote? Have we got the mandate right?”  He added: “Should it have a growth mandate? We should have that debate.”  The BoE’s rate-setting committee is made up of nine members, including Governor Andrew Bailey, four senior central bank executives, and four independent external members appointed by the chancellor. A representative from the U.K. Treasury joins MPC meetings but is not allowed to vote.   Monetary policy has become increasingly politicized since the Covid-19 pandemic, after which inflation soared to double digits and the BoE raised rates to their highest levels in 15 years. The International Monetary Fund has warned the U.K. faces the highest inflation in the G7 this year and next.   Tice’s comments come ahead of a speech in the City of London Wednesday, where he is expected to set out a wide-ranging aspiration for financial services deregulation should Reform UK enter government in Britain’s 2029 general election. The deputy leader said the U.K. needs a “complete sea change” in how risk is approached in the City, and called for further red tape cutting on banks, hedge funds and other City giants. “No one’s stepping back and asking big, philosophical questions,” he said.   Tice told POLITICO his party is “happy” with the BoE’s independence, but said it is “ridiculous” that “no one dares to” question the performance of the central bank despite the U.K. “outsourcing all responsibility for massive issues that affect ordinary people.”  He argued the BoE had “failed” under Conservative Liz Truss, who was forced out as prime minister after bond yields spiked in the wake of a tax-cutting budget, leading banks to increase their lending rates. Tice accused City regulators of “missing” the issue of liability-driven investments (LDIs), which increased the strain on pension funds during that period, and said the Bank of England “could have actually stepped in and prevented the carnage.”  Truss has repeatedly blamed the Bank of England for failing to anticipate the market consequences of her budget. The central bank intervened after her mini-budget to calm the markets by implementing an emergency bond buying scheme.  WIDER REFORM Reform leader Farage, who is set to give a speech in the City Monday on his broader vision for the economy, has gone further, saying Bailey has “had a good run” and he “might find someone new” if the party wins the next election.  Bailey’s term is due to end in 2028, before the election. Tice did not rule out the prospect of a Reform government forcing out an underperforming central bank governor in future, saying: “At the end of the day, any public official has to be accountable for their performance.”  However, he declined to liken Reform’s stance to Donald Trump’s approach to the Federal Reserve, after the U.S. president repeatedly attempted to get rid of chair Jerome Powell.  Reform UK is currently ahead in the polls, as Britain’s Labour government continues to struggle with its messaging on the economy, immigration and frustration within Prime Minister Keir Starmer’s top ranks. Reform leader Nigel Farage, who is set to give a speech in the City Monday on his broader vision for the economy. | Mark Kerrison/Getty IMages Tice argued Labour — which has made growth its primary objective by rolling back 2008 financial crisis legislation — is adding rather than removing regulation, and accused it and the opposition Conservatives of “tinkering around the edges.”  “We’re not going to create any form of meaningful growth under the current trajectory of this government, or under the trajectory of any Conservative plans,” he said. “We are heading towards impoverishment and growth has relentlessly declined as borrowing has relentlessly increased, particularly if you look per head. And it requires a complete sea change in the way that we think about risk and reward.”  Asked whether a Reform government would go further than Labour on deregulation, Tice said: “Yes. We want to ask some very big questions about how we do things.”  Tice also argued that regulators such as the Financial Conduct Authority — which Farage hopes to strip of its role regulating banks — have “utterly failed to do their job.”  Asked if he believes Britain has now moved on enough since the 2008 financial crisis to strip away “protections,” he replied: “There are all sorts of different reasons why the ’08 crash happened. But we supposedly had all the mechanisms of protection there, and they failed. No one was properly held to account.” 

DUBLIN — Independent socialist Catherine Connolly swept to a landslide victory Saturday to become Ireland’s next president, dealing a record-breaking rebuke to the two center-ground parties of government. Jubilant supporters of the 68-year-old Connolly, a lawmaker from the western city of Galway, embraced and kissed her as final results from Friday’s election were announced at the Dublin Castle count center. In her victory speech, Connolly struck an immediate note of unity. She stood side by side with Ireland’s government leaders — and pledged to challenge the far right and its anti-immigrant agenda. “Together we can shape a new republic that values everybody, that values and champions diversity … and the new people that have come to our country,” she said. “I will be an inclusive president for all of you.” Connolly won a record 63.4 percent of valid votes. Heather Humphreys of the government coalition party Fine Gael finished a distant second with 29.5 percent. Connolly’s triumph shattered the previous record set in 1959 when Eamon de Valera, the towering figure of 20th-century Irish politics, won his first term as president with 56.3 percent support. On Nov. 11, Connolly will succeed her fellow Galway socialist Michael D. Higgins, Ireland’s president since 2011, who was constitutionally barred from seeking a third seven-year term. Finishing in third and last place Saturday was Jim Gavin of the largest government party, Fianna Fáil, who won barely 7 percent of votes. Gavin, a political novice hand-picked by Prime Minister Micheál Martin, remained on the official ballot despite quitting the race midway after admitting he had pocketed €3,300 in excess rent from a tenant. Connolly won, in no small part, thanks to backing from Ireland’s five left-wing parties, most crucially Sinn Féin. All stood aside to give her a clean run on an anti-government platform, a political first for the normally fractious left. While the left celebrated from Dublin Castle to Galway, Ireland’s disgruntled conservatives left their own mark on the election — by vandalizing their ballots in unprecedented numbers. More than 200,000 ballots — or about one of every eight cast — had to be discarded. Many voters had written in the names of their own invalid choices, or drawn disparaging X marks across all three candidates. Others defaced their ballots, often with anti-immigrant messages expressed in nativist or racist terms. Their alienation reflects how the government parties, Fianna Fáil and Fine Gael, since the 1990s have largely ditched their previous bonds with Catholic conservatism and have become, like Connolly and the wider left, socially progressive and welcoming to immigrants. A Catholic conservative, Maria Steen, narrowly failed to qualify for the ballot, falling two short of the required backing from 20 lawmakers. Mixed martial arts fighter Conor McGregor, who often denounces immigrants in his social media posts, tapped out after attracting virtually no official support. Kevin Cunningham, managing director of the polling firm Ireland Thinks, called the volume of spoiled votes “enormous.” He found that more than two-thirds of protesting voters had expressed support for Steen. The final week of campaigning coincided with one of the biggest flare-ups of racist sentiment since downtown Dublin was wracked by rioting in November 2023. On Tuesday and Wednesday nights, crowds of up to 2,000 people clashed with riot police protecting Citywest, a hotel and conference center southwest of Dublin that has been turned into the state’s biggest shelter for asylum seekers. That area registered one of the highest rates of spoiled ballots. And on Friday, Sinn Féin leader Mary Lou McDonald, who had opted not to seek the presidency herself, was subjected to vulgar threats from an anti-immigration activist as she canvassed in her central Dublin constituency for Connolly. That man, who posted video footage of his verbal assault on McDonald and other Sinn Féin canvassers, was arrested Saturday. Humphreys — who had stepped into the breach when Fine Gael’s original candidate, former European Commissioner Mairead McGuinness, quit the race citing health problems — conceded defeat hours before the official result. Humphreys, too, expressed worries about the rising level of social media-driven harassment. Humphreys, a member of the Republic of Ireland’s tiny Protestant minority, said she hadn’t regretted running despite suffering a barrage of online insults belittling her family’s background. She said that vitriol had demonstrated that her country wasn’t yet ready to reconcile, and potentially unite as Irish nationalists want, with Protestants in the neighboring U.K. territory of Northern Ireland. “My family and I were subject to some absolutely awful sectarian abuse. As a country, I thought we had moved on from that,” Humphreys said. “If we’re ever to have a united Ireland, we have to respect all traditions.”

BRUSSELS — EU leaders are set to instruct the European Commission to design a legal proposal to use billions of euros in Russian frozen state assets to fund a massive loan to Ukraine, after Belgium signaled it would not stand in the way. The controversial proposal, if adopted, could release up to €140 billion to fund Ukraine’s war effort for another two to three years, using Russian state assets that were immobilized after its full-scale invasion of Ukraine in February 2022. The European Commission, which has executive power in the EU, first floated the idea in September, but has been waiting for the explicit blessing of European heads of state and government before it moves ahead with a concrete proposal. This is likely to come when the 27 EU leaders hold their quarterly European Council meeting in Brussels on Thursday. In preparation for the meeting, EU ambassadors informally agreed draft European Council conclusions seen by POLITICO that call on the Commission to put forward a proposal that is “underpinned by appropriate European solidarity and risk-sharing.” This text is “the political go-ahead” for the Commission to issue a proposal after Thursday’s meeting, a Belgian diplomat said. “I’m not so worried about Belgium” creating problems in the European Council, echoed an EU diplomat from another country. Belgium has taken a cautious approach because it hosts Euroclear, the financial body that holds the frozen assets, and fears a court could force it to repay the money itself. But the Belgian diplomat told POLITICO the country would not oppose the call this Thursday for the Commission to come forward with a proposal. Still, even if the Commission gets a green light, its legal proposal will have to survive weeks of difficult negotiations with national capitals. AN EXISTENTIAL MOMENT For Ukraine, the outcome could prove existential. Without the EU loan, Ukraine faces a $60 billion budget shortfall over the next two years. With the U.S. effectively pulling reliable support for the war-torn country, European officials privately describe this initiative as the “last bullet” to strengthen Kyiv’s hand in peace talks with Russia. It comes as Washington’s inconsistent position on the conflict appeared to swing in Russia’s favor over the weekend. Securing the multi-billion “reparations loan” to Ukraine before U.S. President Donald Trump and Russia’s Vladimir Putin meet in Budapest over the coming weeks would be a major boost for Kyiv, undermining attempts to force it to make painful territorial concessions to Moscow. “The Russians are betting on our war fatigue, but the reparations loan can show Russia that Ukraine will be financially viable for the next two or three years,” said an EU diplomat who, like others quoted in this story, was granted anonymity to speak freely. BELGIUM’S RED LINES The Commission is confident it can design a plan that is legally sound and avoids accusations of expropriating Russian assets, according to officials briefed on the matter. The assets held by Euroclear are invested in Western government bonds that have matured into cash. The cash is now sitting in a deposit account with the European Central Bank that the Commission wants to send to Ukraine. In order for this plan to come to fruition, the Commission will still have to convince Belgium’s right-wing Prime Minister Bart De Wever — who has a knack for punchy comments — to give the loan his blessing. | Pool photo by Andreas Gora via Getty Images Brussels argues this does not amount to confiscation as Russia could still regain the frozen assets by paying post-war compensations to Ukraine — something that is, however, seen as very unlikely. In order for this plan to come to fruition, the Commission will still have to convince Belgium’s right-wing Prime Minister Bart De Wever — who has a knack for punchy comments — to give the loan his blessing. The country fears it could end up having to repay the loan if a court ruling compels the EU to return the money to Russia. The Commission described this scenario as very unlikely as Russian court rulings wouldn’t be enforceable in Europe. Separately, the Commission floated a number of concessions to quell Belgium’s concerns in an informal document on Thursday. But these guarantees are “too broad and don’t answer all the questions” raised by De Wever in a previous statement, the Belgian diplomat added. In order not to single out Euroclear, the Commission said it will explore using €25 billion of Russian assets held by bank accounts and depositories elsewhere in the bloc — but admitted that operation is legally tricky. Belgium fears that investors from countries such as China will withdraw their investments from Euroclear over fears that their funds will also be taken away for political reasons. In a further concession, the EU executive suggested a safety net that allows the Commission to instantly lend money to countries if they ever have to repay the loan. This is meant to reassure Belgium that it won’t be left alone, and that other EU countries will contribute in the worst-case scenario. Even without Belgium’s final approval on Thursday, the Commission can still put forward a legal proposal after the leaders’ meeting. “Belgium has put forward a maximalist position in order to compromise once there is a proposal on the table,” said the first EU diplomat.

The Court of Justice of the European Union ruled Thursday that pets can be considered “baggage,” dealing a setback to pet owners seeking higher compensation for animals lost during international flights. The decision comes from a case in which a dog escaped from its pet-carrier at Buenos Aires airport in October 2019 and was never recovered. Its owner had sought €5,000 in compensation from Iberia airlines, which admitted the loss but argued that liability is limited under EU rules for checked baggage. The high court concluded that the 1999 Montreal Convention, which governs airline liability for baggage, applies to all items transported in the hold, including pets. While EU and Spanish laws recognize animals as sentient beings, the Luxembourg-based court emphasized that the Montreal Convention’s framework is focused on material compensation for lost or damaged items. Airlines are therefore not obligated to pay amounts exceeding the compensation caps set under the Montreal Convention unless passengers declare a “special interest” in the item, a mechanism designed for inanimate belongings. “The court finds that pets are not excluded from the concept of ‘baggage’. Even though the ordinary meaning of the word ‘baggage’ refers to objects, this alone does not lead to the conclusion that pets fall outside that concept,” the court said in a statement. Thursday’s ruling reaffirms the current framework, limiting airlines’ liability for lost pets unless passengers make a special declaration to raise coverage. For airlines operating in Europe, it offers legal certainty and shields them from larger claims. The court’s judgment will guide national courts in balancing international air transport law with EU animal welfare standards.