LONDON — Emergency support to help Brits grappling with rising bills should go to “those who need it most,” Chancellor Rachel Reeves said Tuesday — all-but ruling out a Liz Truss-style universal bailout in response to the Iran war. Pledging to “learn the mistakes of the past,” Reeves told MPs Tuesday that, while “contingency planning” is underway for “every eventuality,” the government will be “responsible” with public finances in any new state intervention. Oil and gas prices have soared since the conflict began, leading to higher fuel prices in the U.K. and sparking fears of a sharp increase in family and business energy bills when a regulated price cap period ends in July. Reeves said that, while the full impact of the crisis is not yet known, “the challenges may be significant.” In response to the 2022 energy crisis sparked by Russia’s invasion of Ukraine, the government of then-Prime Minister Liz Truss subsidized the bill of every household in the country — a policy backed by the Labour Party at the time. But Reeves today criticized the “unfunded, untargeted” 2022 package, saying it had pushed up borrowing, interest rates and inflation. Between 2022 and 2024, households in the top income decile received an average £1,350 of direct energy bill support, Reeves said, contributing to national debt “still being paid today.” However, the chancellor stopped short of explicitly ruling out a similar approach. She said: “Contingency planning is taking place for every eventuality so that we can keep costs down for everyone and provide support for those who need it most, acting within our ironclad fiscal rules to keep inflation and interest rates as low as possible.” The government has already announced a £53 million package of support for households that use heating oil, which are not protected by the energy price cap. The majority of households that use gas and electricity will not see prices rise until July, when the next price cap period ends. The latest expert projections suggest the average annual bill could rise by more than £200 from current levels. On fuel pricing, Reeves said the government would give an update “within the next month,” amid pressure from opposition parties to extend a longstanding five pence tax relief on gasoline and diesel — the fuel duty cut — beyond its expiry date in September. U.K. gasoline prices have have risen by nearly 16 pence per liter since the war began, while diesel has risen by more than 31 pence.

ROME — Italian right-wing Prime Minister Giorgia Meloni’s crushing defeat in Monday’s referendum on judicial reform has shattered her aura of political invincibility, and her opponents now reckon she can be toppled in a general election expected next year. The failed referendum is the the first major misstep of her premiership, and comes just as she seemed in complete control in Rome and Brussels, leading Italy’s most stable administration in years. Her loss is immediately energizing Italy’s fragmented opposition, making the country’s torpid politics suddenly look competitive again. Meloni’s bid to overhaul the judiciary — which she accused of being politicized and of left-wing bias — was roundly rejected, with 54 percent voting “no” to her reforms. An unexpectedly high turnout of 59 percent is also likely to alarm Meloni, underscoring how the vote snowballed into a broader vote of confidence in her and her government. She lost heavily in Italy’s three biggest cities: In the provinces of Rome, the “no” vote was 57 percent, Milan 54 percent and Naples 71 percent. In Naples, about 50 prosecutors and judges gathered to open champagne and sing Bella Ciao, the World War II anti-fascist partisan anthem. Activists, students and trade unionists spontaneously marched to Rome’s Piazza del Popolo chanting “resign, resign.”  In a video posted on social media, Meloni put a brave face on the result. “The Italians have decided and we will respect that decision,” she said. She admitted feeling some “bitterness for the lost opportunity … but we will go on as we always have with responsibility, determination and respect for Italy and its people.” In truth, however, the referendum will be widely viewed as a sign that she is politically vulnerable, after all. It knocks her off course just as she was setting her sights on major electoral reforms that would further cement her grip on power. One of her main goals has been to shift to a fixed-term prime ministership, which would be elected by direct suffrage rather than being hostage to rotating governments. Those ambitions look far more fragile now. The opposition groups that have struggled to dent Meloni’s dominance immediately scented blood. After months on the defensive, they pointed to Monday’s result as proof that the prime minister can be beaten and that a coordinated campaign can mobilize voters against her. Matteo Renzi, former prime minister and leader of the centrist Italia Viva party, predicted Meloni would now be a “lame duck,” telling reporters that “even her own followers will now start to doubt her.” When he lost a referendum in 2016 he resigned as prime minister. “Let’s see what Meloni will do after this clamorous defeat,” he said.  Elly Schlein, leader of the opposition Democratic Party, said: “We will beat [Meloni] in the next general election, I’m sure of that. I think that from today’s vote, from this extraordinary democratic participation, an unexpected participation in some ways, a clear political message is being sent to Meloni and this government, who must now listen to the country and its real priorities.”  Former Prime Minister Giuseppe Conte, leader of the populist 5Star Movement heralded “a new spring and a new political season.” Angelo Bonelli , leader of the Greens and Left Alliance, told reporters the result was “an important signal for us because it shows that there is a majority in the country opposed to the government.” ‘PARALLEL MAFIA’ The referendum itself centered on changes to how judges and prosecutors are governed and disciplined, including separating their career paths and reshaping their oversight bodies. The government framed the reforms as a long-overdue opportunity to fix a system where politicized legal “factions” impede the government’s ability to implement core policies on issues such as migration and security. Justice Minister Carlo Nordio called prosecutors a “parallel mafia,” while his chief of staff compared parts of the judiciary to “an execution squad.”   A voter is given a ballot at a polling station in Rome, Italy, on March 22, 2026. | Riccardo De Luca/Anadolu via Getty Images Meloni’s opponents viewed the defeated reforms differently, casting them as an attempt to weaken a fiercely independent judiciary and concentrate power. That framing helped turn a technical vote into a broader political contest, one that opposition parties were able to rally around. It was a clash with a long and bitter political history. The Mani Pulite (Clean Hands) investigations of the 1990s, which wiped out an entire political class, left a legacy of mistrust between politicians and the judiciary. The right, in particular, accused judges of running a left-wing vendetta against them. Under Meloni’s rule that tension has repeatedly resurfaced, with her government clashing with courts, saying judges are thwarting initiatives to fight migration and criminality. Meloni herself stepped late into the campaign, after initially keeping some distance, betting that her personal involvement could shift the outcome. She called the referendum an “historic opportunity to change Italy.” In combative form this month, she had called on Italians not squander their opportunity to shake up the judges. If they let things continue as they are now, she warned: “We will find ourselves with even more powerful factions, even more negligent judges, even more surreal sentences, immigrants, rapists, pedophiles, drug dealers being freed and putting your security at risk.” It was to no avail, and Meloni was hardly helped by the timing of the vote. Her ally U.S. President Donald Trump is highly unpopular in Italy and the war in Iran has triggered intense fears among Italians that they will have to pay more for power and fuel. The main upshot is that Italy’s political clock is ticking again. REGAINING THE INITIATIVE For Meloni, the temptation will be to regain the initiative quickly. That could even mean trying to press for early elections before economic pressures mount and key EU recovery funds wind down later this year. The logic of holding elections before economic conditions deteriorate further would be to prevent a slow bleeding away of support, said Roberto D’Alimonte, professor of political science at the Luiss University in Rome. But Italy’s President Sergio Mattarella has the ultimate say about when to dissolve parliament and parliamentarians, whose pensions depend on the legislature lasting until February, could help him prevent elections by forming alternative majorities. D’Alimonte said Meloni’s “standing is now damaged.” “There is no doubt she comes out of this much weaker. The defeat changes the perception of her. She has lost her clout with voters and to some extent in Europe. Until now she was a winner and now she has shown she can lose,” he added. She must now weigh whether to identify scapegoats who can take the fall — potentially Justice Minister Nordio, a technocrat with no political support base of his own.  Meloni is expected to move quickly to regain control of the agenda. She is due to travel to Algeria on Wednesday to advance energy cooperation, a trip that may also serve to pivot the political conversation back to economic and foreign policy aims. But the immediate impact of the vote is clear: A prime minister who entered the referendum from a position of strength but now faces a more uncertain political landscape, against an opposition newly convinced she can be beaten.

HOUSTON — Oil companies and the world’s largest energy consumers face a significant challenge to rebuild global petroleum supply chains and inventories once the critical Strait of Hormuz bottleneck opens, Chevron CEO Mike Wirth said Monday. “We’ve got a lot of oil and gas now that is not flowing into the market,” Wirth said at the CERAWeek by S&P Global conference in Houston. “Physical supply chains don’t respond immediately, so even if the strait opens at some point, it will take time to rebuild inventories of the right grades of crude and the right types of fuel.” Wirth cautioned that Iran’s attacks on oil tankers and the broader damage of the Middle East war did greater damage to oil and gas markets than the Russia-Ukraine war. Asian nations are running low on diesel and jet fuel. The war has held up deliveries of LNG, fertilizer and other products. Part of the challenge, Wirth said, will be taking a read of the damage. It’s unclear how much production has been shut in, Wirth said, and how badly some facilities were damaged. At the same event, Energy Secretary Chris Wright reiterated to oil executives that he anticipated the global disruption to oil and gas flows would be “short-term,” but he encouraged companies to ramp up production. “Markets do what markets do,” Wright said. “Prices went up to send signals to everyone that can produce more: ‘Please, produce more.’”

Listen on * Spotify * Apple Music * Amazon Music Nach 35 Jahren verliert die SPD ihre Bastion Rheinland-Pfalz. Gordon Schnieder führt die CDU zum Sieg, während Alexander Schweitzer trotz persönlicher Beliebtheit dem massiven Bundestrend unterliegt. Gemeinsam mit Rasmus Buchsteiner analysiert Gordon Repinski die Schockwellen für Berlin und die Bundespolitik. Im 200-Sekunden-Interview spricht der schleswig-holsteinische Ministerpräsident Daniel Günther (CDU) über den „Auftrag zur Beherztheit“. Günther ordnet ein, warum der Wahlsieg in Mainz kein Grund zum Ausruhen ist, sondern die Koalition in Berlin nun zwingt, die großen Sozial- und Rentenreformen durchzuziehen. Donald Trump verliert die Geduld: Angesichts der immer weiter steigenden Energiepreise in den USA hat der Präsident ein 48-Stunden-Ultimatum gestellt. Entweder das Regime gibt die Straße von Hormus frei, oder die USA bombardieren iranische Kraftwerke. Jonathan Martin berichtet aus Washington über die Frustration im Weißen Haus und warum dieses „Roulette“ für Trump zur Schicksalsfrage für die Midterm-Elections im November wird. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. ⁠Jetzt kostenlos abonnieren.⁠ Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: ⁠@gordon.repinski⁠ | X: ⁠@GordonRepinski⁠. POLITICO Deutschland – ein Angebot der Axel Springer Deutschland GmbH Axel-Springer-Straße 65, 10888 Berlin Tel: +49 (30) 2591 0 ⁠information@axelspringer.de⁠ Sitz: Amtsgericht Berlin-Charlottenburg, HRB 196159 B USt-IdNr: DE 214 852 390 Geschäftsführer: Carolin Hulshoff Pol, Mathias Sanchez Luna **(Anzeige) Eine Nachricht der PKV: Hätten Sie’s gedacht? Vom jährlichen 15,5-Milliarden-Euro-Mehrumsatz der Privatversicherten profitiert das gesamte Gesundheitswesen. Denn neben den Haus- und Fachärzten kommen die höheren Honorare auch den zahnärztlichen Praxen zugute, dem Arzneimittelbereich oder Therapeutinnen. So stützt die PKV die medizinische Versorgung in Deutschland zugunsten aller – auch der gesetzlich Versicherten. Mehr auf pkv.de**

LONDON — Donald Trump has berated Keir Starmer over the Iran war. But the U.S. president might just have bought the British leader a little more time in the job. Trump blasted Starmer as “no Winston Churchill” for his limits on the U.S. launching offensive attacks from British bases — and has helped stoke criticism from opposition parties at home about an indecisive U.K. administration. But the global tumult from the U.S.-led war in the Middle East has had one counter-effect: strengthening, for now, Starmer’s precarious domestic position. Numerous errors and climbdowns — plus voter frustration at not seeing the “change” promised in the 2024 election — has left Starmer one of the most unpopular British prime ministers on record. Missteps and a failure to bring political troops with him on a host of controversial issues have also left Starmer sorely lacking support among his own MPs. Whether he will survive past a difficult round of local elections on May 7 is an open talking point at Westminster. Would-be replacements, including Health Secretary Wes Streeting and former Deputy Labour Leader Angela Rayner, have made little secret of their hope to stand if a contest arises. But external events have a habit of changing the course of politics. And a sense is growing that the crisis in the Middle East is dampening the chatter about removing the prime minister. “Iran has bought him time,” said one Labour official, who like others in this piece spoke on the condition of anonymity to discuss internal party tensions. A Labour frontbencher, who in the past predicted Starmer would be out after the spring elections, said the war is “making colleagues think again about changing leader,” adding: “It focuses minds on who we want leading the country at a time of crisis. Would we really want Angela or Wes sitting around the NATO table?” Britain’s involvement entered a new stage on Friday, when the U.K. said the U.S. could use British bases to bomb Iranian missile sites attacking commercial shipping the Strait of Hormuz. Downing Street insisted this fell within the existing scope of “defensive” action that Starmer approved on Mar. 1. There is broad agreement among Labour MPs that Starmer has taken the correct approach to the conflict — refusing to let jibes from Trump rile him while sticking to his position that the initial U.S.-Israel offensive action was wrong but that allies need defending from Iranian blowback. “Most other potential prime ministers, Labour or otherwise, wouldn’t have had the backbone to stand firm, and would now be explaining to a furious British public how we were disentangling ourselves from Trump’s war and all the ensuing economic challenges we will face,” said one senior government official. The same person sensed that even among rival leadership camps “there is an acknowledgement that this war changes things. It would be a terrible time to be seen to be playing politics by any contender.” Health Secretary Wes Streeting speaks to the press at the University of Kent in Canterbury, England on March 19, 2026. | Dan Kitwood/Getty Images Indeed, one of Streeting’s allies accepted that there won’t be a leadership challenge while the war continues, adding that being a statesman on the world stage is “what Keir is good at.” Even disgruntled MPs have been telling each other “there’s no way there could be a challenge at a time like this,” one noted, while Conservative MPs have also discussed how the war has shored up the Starmer position.  But the calculation among plotters is still likely to come down to weighing the state of the war against how bad the verdict is from voters at the May local elections. “He’s played a blinder and is exactly where most of the country is,” one Starmer critic said. “But if it’s a bloodbath in May it would still be tricky. And it feels like everyone is on maneuvers in Westminster.” That is acknowledged even in government. One minister said the outcome will be difficult to predict if election results are “catastrophic,” while another said: “There is still a feeling that things are untenable and could come to a head quite quickly.” Cabinet ministers including Chancellor Rachel Reeves have been contacting junior ministers in recent weeks encouraging them to rally round the prime minister, said one of those on the receiving end. They described the outreach as one of the “save Keir calls.” Some note, too, that those arguing that a leader cannot be changed during a war have forgotten lessons from the past. “The center [of government] will argue people shouldn’t move at a time of war, but we changed leaders during two world wars,” said another government frontbencher. “If things are really bad in May, I don’t think it will be the argument that stops people.” Even the ongoing Ukraine war serves as a lesson. There was murmuring among Conservative MPs that it would be wrong to oust their then-Prime Minister Boris Johnson amid war in Europe. But he was gone six months after the BBC reported it in 2022.  The opposition is also not giving Starmer the grace he afforded to Johnson as the Ukraine crisis mounted. “Starmer is in office but not in power and that is making Britain’s response to this conflict confused and incoherent,” a Conservative spokesperson said. In the end, it could be Starmer’s response to bad election results, not his reaction to a war beyond his control, that really seals his fate. “Clearly we are working hard to secure success in the May elections. However, following any election, it is right that there is a full assessment of the outcome,” said Labour MP Rachael Maskell, who has called for Starmer to quit in the past.  “There are always circumstances where a case can be made that ‘now is not the right time’ but what is important is that there is recognition of the outcome, the reasons why and the remedy that is required. “Let’s see where we get to in seven weeks’ time,” she added.

The Cuban deputy foreign minister issued a blunt warning to the U.S. on Sunday: His island’s military is “prepared” for any U.S. aggression as the Trump administration continues to push for regime change in the country. Speaking to NBC’s Kristen Welker in a sometimes tense interview, Carlos Fernández de Cossío said he doesn’t understand why the U.S. would attack the island — but added, “our military is always prepared. And in fact it is preparing these days for the possibility of military aggression.” “Our country has historically been ready to mobilize, as a nation as a whole, for military aggression,” Cossío said on “Meet the Press.” “We truly always see it as something far from us. We don’t believe it is something that is probable. But we would be naive if we do not prepare.” Cossío’s warning came days after President Donald Trump spoke of “taking” Cuba. “I do believe I’ll be the honor of — having the honor of taking Cuba. That’d be a good hon — that’s a big honor,” Trump told reporters. “I mean, whether I free it, take it. I think I can do anything I want with it, you want to know the truth.” American presidents have been hoping to see a new government in Cuba since Fidel Castro took power in 1959. Still, Cossío said on Sunday that regime change is “absolutely” off the table. “Cuba is a sovereign country and has the right to be a sovereign country and has the right to self-determination,” he said. “Cuba would not accept to become a vassal state or a dependent state from any other country or any other superpower.” Cuba’s economy has plummeted since the Trump administration captured Venezuelan leader Nicolás Maduro in January. The U.S. has cut off Venezuelan oil supplies, which are critical to propping up the island’s economy, and the nation’s transportation, health and education systems are also strained. But the U.S.’s oil blockade is “very severe,” Cossío said, accusing the United States of threatening other countries “with coercive measures” against importing fuel to the island. “We do hope that fuel will reach Cuba one way or the other and that this boycott that the United States has been imposing does not last and cannot be sustained forever,” Cossío said. Though the U.S. and Havana are now in discussions, led by Secretary of State Marco Rubio, the son of Cuban immigrants, Cossío said those discussions do not include regime change — or the release of political prisoners. “We are in dialogue with the United States to talk about bilateral issues. We’re not talking about prisoners in the United States, and the U.S. has the highest record of prisoners in the world,” Cossío said. And though Rubio this week asserted that Cuba will collapse “on its own” and Havana’s leaders “don’t know how to fix” the country, Cossío insisted his country is not in any state of collapse. “What does ‘on its own’ mean when it’s being forced by the United States? It’s a very bizarre statement,” he said. “Why does the U.S. government need to employ so many resources, so much political capital, so many human resources, to try to destroy the economy of another country? Evidently, it implies that the country does not have the characteristics to collapse on its own.”

Moscow proposed a quid pro quo to the U.S. under which the Kremlin would stop sharing intelligence information with Iran, such as the precise coordinates of U.S. military assets in the Middle East, if Washington ceased supplying Ukraine with intel about Russia. Two people familiar with the U.S.-Russia negotiations said that such a proposal was made by Russian envoy Kirill Dmitriev to Trump administration envoys Steve Witkoff and Jared Kushner during their meeting last week in Miami. The U.S. rejected the proposal, the people added. They, like all other officials cited in this article, were granted anonymity due to the sensitivity of the discussions. Nevertheless, the sheer existence of such a proposal has sparked concern among European diplomats, who worry Moscow is trying to drive a wedge between Europe and the U.S. at a critical moment for transatlantic relations. U.S. President Donald Trump has voiced anger over the refusal of allies to send warships in the Strait of Hormuz. On Friday, he lambasted his NATO allies as “COWARDS“ and said: “we will REMEMBER!” The White House declined to comment. The Russian Embassy in Washington did not respond to a request for comment. One EU diplomat called the Russian proposal “outrageous.” The suggested deal is likely to fuel growing suspicions in Europe that the Witkoff-Dmitriev meetings are not delivering concrete progress toward a peace agreement in Ukraine, but are instead seen by Moscow as a chance to lure Washington into a deal between the two powers that leaves Europe on the sidelines. On Thursday, the Kremlin said that the U.S.-mediated Ukraine peace talks were “on hold.” Russia has made various proposals about Iran to the U.S., which has rejected them all, another person familiar with the discussions said. This person said the U.S. also rejected a proposal to move Iran’s enriched uranium to Russia, which was first reported by Axios. Russia has expanded ‌intelligence-sharing and military cooperation with Iran since the war started, a person briefed on the intelligence said. The Wall Street Journal first reported the increase and wrote that Moscow is providing satellite ⁠imagery and drone technology to help Tehran target U.S. forces in the region. The Kremlin called that report  “fake news.” Trump hinted at a link between the intelligence-sharing with Iran and Ukraine during a recent interview with Fox News, saying that Russian President Vladimir Putin “might be helping them [Iran] a little bit, yeah, I guess, and he probably thinks we’re helping Ukraine, right?” The U.S. continues to share intelligence with Ukraine, even as it has reduced other support. Washington briefly paused the exchanges last year after a disastrous Oval Office meeting between Trump and Ukrainian President Volodymyr Zelenskyy. That abrupt halt to U.S. intelligence sharing triggered a chaotic scramble among allies and exposed deep tensions in the partnership with Kyiv. One European diplomat sought to downplay the risk of the Russian proposal, noting that French President Emmanuel Macron had said in January that “two-thirds” of military intelligence for Ukraine is now provided by France. Still, intelligence-sharing remains a last crucial pillar of American support for Ukraine after the Trump administration stopped most of its financial and military aid for Kyiv last year. Washington is still delivering weapons to Ukraine but under a NATO-led program where allies pay the U.S. for arms. Deliveries of critical air defense munitions, however, are under strain amid the U.S.-Israel war with Iran.  Most recently, the Trump administration decided to ease sanctions on Russian oil to alleviate pressure on oil markets, causing strong concern and criticism from  European leaders like German Chancellor Friedrich Merz. Hans von der Burchard reported from Berlin, Felicia Schwartz and Diana Nerozzi from Washington and Jacopo Barigazzi from Brussels.

The Bank of England warned it may have to take a tougher line on interest rates as the spike in energy prices caused by the U.S.-Israeli war on Iran pushes inflation higher. “Monetary policy cannot reverse this shock” to world energy supply, Governor Andrew Bailey said in a statement on Thursday, after the Monetary Policy Committee voted unanimously to leave the Bank rate unchanged at 3.75 percent. “Monetary policy must, however, respond to the risk of a more persistent effect on U.K. consumer price inflation,” Bailey added. The Bank had only last month declared victory over inflation, which has been above its 2 percent target for over four years. However, its latest analysis suggests headline inflation will rebound back above 3 percent in the next three months and could add as much as 0.75 percentage points to the consumer price index over the summer, as higher fuel bills percolate through the economy. “The MPC is alert to the increased risk of domestic inflationary pressures through second-round effects in wage and price-setting, the risk of which will be greater the longer higher energy prices persist,” the Bank stressed. However, it also acknowledged that the energy price spike is likely to hurt economic growth, and that it is “assessing the implications for inflation of the weakening in economic activity that is likely to result from higher energy costs.” Until the U.S. and Israel attacked Iran, most analysts had predicted that a slowing economy and growing prospects of easing inflation would allow the MPC to cut rates at Thursday’s meeting. However, the invasion and the ensuing turmoil in world commodity markets have turned the situation on its head, by closing a vital chokepoint at the mouth of the Persian Gulf, through which irreplaceable volumes of oil, gas and fertilizer pass every day. As a result, the Bank warned that there is now a real threat of higher energy prices causing a broader rise in prices across the economy. Food prices face a similar risk. ALREADY OUT OF DATE? The situation is changing so fast that the Bank’s latest forecasts could already be out of date. The Bank said they were based on the situation as of March 16, when Brent oil futures were only at $100 a barrel. But a succession of strikes on key energy installations around the Persian Gulf since then has already pushed prices up by another 12 percent. “The news flow around the war in Iran looks more worrying for global markets with each passing day,” Deutsche Bank strategist Jim Reid said in a note on Thursday. Analysts argued ahead of the meeting that the Bank would prefer to err on the side of keeping policy tight in the face of the new risks, given lingering concerns about its credibility due to its slow response to the inflation shock in 2022. Inflation peaked at 11.1 percent back then, the highest rate posted by any major economy. The Bank’s change in outlook will make life doubly uncomfortable for the Labour government, which had hoped that its efforts to close the U.K. budget deficit would be rewarded with lower inflation and lower interest rates. Instead, the government’s key 10-year borrowing costs have risen by nearly half a percentage point since the war started, and they leaped again on Thursday, first in response to Iranian attacks on a Qatari gas field, then to the BoE’s statement. At 4.89 percent, the 10-year gilt yield is now at its highest in 15 months. The pound, by contrast, was steady against the dollar and euro after the decision. The Office for Budget Responsibility earlier this month already cut its forecasts for U.K. growth this year. That implies lower tax receipts which, combined with higher borrowing costs, threaten a new two-way squeeze on Chancellor Rachel Reeves’ fiscal arithmetic, less than six months after she had to raise taxes sharply at her latest budget.

BRUSSELS — An EU summit once billed as a chance to boost the bloc’s economy is now a full-blown stress test. Leaders gathering Thursday face a combustible agenda: Ukraine’s financial survival, Middle East escalation, transatlantic tensions, and deep internal rifts over energy and climate policy. Thursday’s meeting has been dramatically reshaped in recent days by the U.S.-Israeli war in Iran and a standoff with Hungary over a €90 billion lifeline for Kyiv — turning what had been meant to be a forward-looking discussion into a scramble to manage multiple crises at once. Leaders will still try to push ahead on plans to strengthen Europe’s competitiveness, from deepening the single market to easing the burden on businesses. But those longer-term ambitions risk being overshadowed by more immediate geopolitical fires, alongside intense discussions on continent’s energy, defense and migration policies, according to a draft version of the post-summit joint statement obtained by POLITICO.   Expect a packed — and likely fractious — day in Brussels. Here’s POLITICO’s cheat sheet of the five biggest clashes to look out for at the European Council. THE €90B QUESTION: HUNGARY VS. EVERYONE  A €90 billion lifeline for Ukraine — which will determine Kyiv’s ability to continue defending itself against Russian aggression — hangs on whether Hungary lifts its veto. EU leaders agreed in December to provide the funding. But Hungarian Prime Minister Viktor Orbán later reneged and blocked the deal over a dispute with Ukraine about a damaged pipeline carrying Russian oil to Central Europe. Budapest has accused Kyiv of trying to engineer an energy crisis in Hungary by cutting off Russian oil supplies and says it won’t approve the cash disbursement until flows resume. The European Commission said Tuesday it had offered to help repair the pipeline and that Ukraine had accepted, raising hopes of a breakthrough. The move could prompt Hungary to lift its veto, one diplomat familiar with Budapest’s thinking said, speaking on condition of anonymity like others in this article to discuss sensitive negotiations. But Orbán struck a defiant tone in a video posted after the Commission’s announcement, saying: “If there is no oil, there is no money.” That leaves him isolated from almost all other leaders, aside from Slovakia’s Robert Fico. “The behavior from Hungary is a new low,” Sweden’s Europe Minister Jessica Rosencrantz told POLITICO ahead of the meeting. Another diplomat said that “if we fail on the loan, [Ukrainian leader Volodymyr] Zelenskyy will rightly be furious.” The latest draft conclusions still point to disbursement by early April — a timeline leaders will be endeavoring to rescue in their negotiations. HORMUZ DILEMMA: IRAN’S THREATS VS. A RELUCTANT EUROPE Tehran’s attacks on ships in the Strait of Hormuz — a vital oil transit point — have jacked up the global price of oil and forced Europe to weigh whether to get involved. One idea was to expand the mandate of the EU’s Middle East naval mission, Aspides, to allow European warships to patrol the waterway. That was quickly ruled out by the bloc’s foreign ministers on Monday. “Nobody wants to go actively in this war,” the EU’s top diplomat, Kaja Kallas, said after the foreign envoys met. Instead, leaders will call for the reinforcement of existing naval missions, Aspides and Atalanta, with “more assets” (read: ships) — while stopping short of extending their reach to Hormuz, according to the draft summit conclusions. The text stresses that operations must remain “in line with their respective mandates.” A diplomat from the Gulf region said they were watching closely but did not expect any major shift from EU leaders, such as expanding the Aspides mandate or launching joint operations with third countries. TRANSATLANTIC TREMORS: TRUMP VS. EUROPEAN CAPITALS  Europe’s refusal to step in around the Strait of Hormuz has angered U.S. President Donald Trump, who said it would be “very bad for the future of NATO” if EU countries failed to act. That frustration is only growing. Republican Senator Lindsey Graham said he had spoken to Trump about Europe’s unwillingness to provide assets to keep the strait open and had “never heard him so angry in my life.” The flare-up comes with EU-U.S. ties already under strain. Spain has openly defied Trump over the Iran conflict, refusing to allow the U.S. to use its bases and drawing threats of trade retaliation from Washington. French President Emmanuel Macron has stepped in to back Madrid and signal European solidarity, while other leaders have taken a more cautious or mixed line on how far to push back. Trump may not be on the formal agenda, but his pressure will loom over the summit — and sharpen already fraught debates over defense, trade and Europe’s reliance on the U.S. ETS BRAWL: ITALY, POLAND AND OTHERS VS. THE COMMISSION  A major brawl is brewing over the EU’s Emissions Trading System between a cadre of member countries and the EU’s executive.  Ten EU member countries sent a letter to the Commission ahead of Thursday’s summit asking to speed up a planned review of the ETS, a cornerstone of the bloc’s climate policy that forces big polluters to cough up.  Poland, Czechia, Slovakia, Romania, Greece, Hungary, Italy, Bulgaria, Austria and Croatia are urging the EU executive to reexamine the scheme by the end of May at the latest, arguing it harms their industries and is contributing to rising energy prices.  But not everyone agrees, with two EU officials from ETS-supporting countries saying the cap-and-trade system must remain in place. The first official argued it is not contributing to the energy crisis and is actually helping Europe’s economy, with its revenues needed for the green transition.   On the topic of energy, the Commission’s proposed gas price cap is also likely to be raised, though not all countries are likely to get on board with that either, according to a senior German government official. According to the draft conclusions, EU leaders will instruct the Commission to “present without delay a toolbox of targeted temporary measures” to bring down energy prices.  COMPETITIVENESS, ANYONE? EU VS. ITSELF Despite the crises crowding the agenda, leaders will still try to push forward plans to revive Europe’s economy, building on talks at a February summit at Alden Biesen in Belgium. Most of the proposals fall under the “One Europe, One Market” push to deepen the single market — easing the movement of goods, services, capital and people across the bloc. The draft conclusions say leaders will back new corporate rules, dubbed “EU Inc.,” to help startups scale across borders, as well as a “simple, unified and voluntary e-declaration system” to make it easier to work across countries. The aim is to move from talk to delivery, with concrete steps and deadlines, another EU diplomat said. But while there is broad agreement on the need for reform, divisions persist over whether EU energy and climate policies — particularly the Emissions Trading System — are holding back growth. That split, with Central, Eastern and Southern European countries pushing for changes and others, including the Nordics, resisting, will likely be the main battleground on competitiveness. Nick Vinocur contributed reporting.

BRUSSELS — Anxiety is growing over Europe’s unusually low gas storage levels as the war in Iran threatens to spark a fight among countries over dwindling global energy supply. The EU requires member countries to maintain gas reserves at 90 percent of capacity by the winter — a measure brought in after Russia’s 2022 invasion of Ukraine. But this year’s colder-than-average winter depleted those reserves to under 30 percent as of March, the lowest since 2022. With gas prices soaring after Iranian attacks effectively closed the Strait of Hormuz — the narrow passage through which 20 percent of the world’s liquefied natural gas passes, of which 6 percent was bound for Europe —  the task of refilling those reserves by the winter carries a greater risk. Behind the scenes, government officials and industry lobbyists warn countries could rush to meet those targets all at once if the rules aren’t loosened, driving up demand and allowing traders to exploit soaring prices. That’s the dynamic that caused traders to bid up gas prices to over €300 per megawatt hour in 2022, with the lofty new storage targets compounding the sharp rise in demand that followed Russia’s supply cuts. Analysts say the difficulty in restocking those reserves will also be made more difficult by stiff competition from Asia, which is more directly exposed than Europe to the gas shipments that once flowed through the Persian Gulf. That could lead to higher mid-year gas prices, undercutting the incentive for traders to sell in the winter and store in the spring and summer. Officials stress it’s still early days. But already, multiple European governments have considered invoking existing carve-outs that allow them to relax storage targets in order to reduce the scope for bulk buying, according to three European energy officials familiar with the matter. Meanwhile, at least three countries believe the EU executive should introduce flexibilities beyond the existing framework, including lowering the target by as much as 30 percent, two of the officials said. The countries also sought a new EU mechanism to coordinate gas purchases, they added. Such policies would allow countries to fill up for the coming winter more comfortably. “With a lower target we would not be driving the demand for very high storage level filling, [and] driving the prices up,” said one of the people. The Commission hasn’t yet ruled on how best to respond, the people said. But it too has explicitly flagged the issue, both at a summit of energy ministers on Monday and previous gatherings of ambassadors and national energy experts over the past week, according to the people cited above and an EU official. A Commission spokesperson didn’t respond to a request for comment. In public, officials remain sanguine. For instance, Germany’s reserves are running at 22 percent capacity after Berlin pushed to lower its storage goals last year, but the country’s economy minister, Katherina Reiche, has downplayed the issue. Others are more nervous. “The status quo is unsustainable — existing mechanisms do not sufficiently ensure the security of gas supply because the incentives to fill gas storage facilities are inadequate,” Sebastian Heinermann, the managing director of German storage association INES, said in a statement Tuesday. Gas industry lobby group Eurogas has also warned that tough EU regulations governing cargoes of liquefied natural gas — which can be shipped to the highest bidder, as opposed to fixed supplies of pipeline gas — makes selling to Europe less appealing to many exporters. That further squeezes the EU’s chances of securing desperately needed fuel on an ever-tightening market.