Thirty-six million Europeans — including more than one million in the Nordics[1] — live with a rare disease.[2] For patients and their families, this is not just a medical challenge; it is a human rights issue. Diagnostic delays mean years of worsening health and needless suffering. Where treatments exist, access is far from guaranteed. Meanwhile, breakthroughs in genomics, AI and targeted therapies are transforming what is possible in health care. But without streamlined systems, innovations risk piling up at the gates of regulators, leaving patients waiting. Even the Nordics, which have some of the strongest health systems in the world, struggle to provide fair and consistent access for rare-disease patients. Expectations should be higher. THE BURDEN OF DELAY The toll of rare diseases is profound. People living with them report health-related quality-of-life scores 32 percent lower than those without. Economically, the annual cost per patient in Europe — including caregivers — is around €121,900.[3] > Across Europe, the average time for diagnosis is six to eight years, and > patients continue to face long waits and uneven access to medications. In Sweden, the figure is slightly lower at €118,000, but this is still six times higher than for patients without a rare disease. Most of this burden (65 percent) is direct medical costs, although non-medical expenses and lost productivity also weigh heavily. Caregivers, for instance, lose almost 10 times more work hours than peers supporting patients without a rare disease.[4] This burden can be reduced. European patients with access to an approved medicine face average annual costs of €107,000.[5] Yet delays remain the norm. Across Europe, the average time for diagnosis is six to eight years, and patients continue to face long waits and uneven access to medications. With health innovation accelerating, each new therapy risks compounding inequity unless access pathways are modernized. PROGRESS AND REMAINING BARRIERS Patients today have a better chance than ever of receiving a diagnosis — and in some cases, life-changing therapies. The Nordics in particular are leaders in integrated research and clinical models, building world-class diagnostics and centers of excellence. > Without reform, patients risk being left behind. But advances are not reaching everyone who needs them. Systemic barriers persist: * Disparities across Europe: Less than 10 percent of rare-disease patients have access to an approved treatment.[6] According to the Patients W.A.I.T. Indicator (2025), there are stark differences in access to new orphan medicines (or drugs that target rare diseases).[7] Of the 66 orphan medicines approved between 2020 and 2023, the average number available across Europe was 28. Among the Nordics, only Denmark exceeded this with 34. * Fragmented decision-making: Lengthy health technology assessments, regional variation and shifting political priorities often delay or restrict access. Across Europe, patients wait a median of 531 days from marketing authorization to actual availability. For many orphan drugs, the wait is even longer. In some countries, such as Norway and Poland, reimbursement decisions take more than two years, leaving patients without treatment while the burden of disease grows.[8] * Funding gaps: Despite more therapies on the market and greater technology to develop them, orphan medicines account for just 6.6 percent of pharmaceutical budgets and 1.2 percent of health budgets in Europe. Nordic countries — Sweden, Norway and Finland — spend a smaller share than peers such as France or Belgium. This reflects policy choices, not financial capacity.[9] If Europe struggles with access today, it risks being overwhelmed tomorrow. Rare-disease patients — already facing some of the longest delays — cannot afford for systems to fall farther behind. EASING THE BOTTLENECKS Policymakers, clinicians and patient advocates across the Nordics agree: the science is moving faster than the systems built to deliver it. Without reform, patients risk being left behind just as innovation is finally catching up to their needs. So what’s required? * Governance and reforms: Across the Nordics, rare-disease policy remains fragmented and time-limited. National strategies often expire before implementation, and responsibilities are divided among ministries, agencies and regional authorities. Experts stress that governments must move beyond pilot projects to create permanent frameworks — with ring-fenced funding, transparent accountability and clear leadership within ministries of health — to ensure sustained progress. * Patient organizations: Patient groups remain a driving force behind awareness, diagnosis and access, yet most operate on short-term or volunteer-based funding. Advocates argue that stable, structural support — including inclusion in formal policy processes and predictable financing — is critical to ensure patient perspectives shape decision-making on access, research and care pathways. * Health care pathways: Ann Nordgren, chair of the Rare Disease Fund and professor at Karolinska Institutet, notes that although Sweden has built a strong foundation — including Centers for Rare Diseases, Advanced Therapy (ATMP) and Precision Medicine Centers, and membership in all European Reference Networks — front-line capacity remains underfunded. “Government and hospital managements are not providing  resources to enable health care professionals to work hands-on with diagnostics, care and education,” she explains. “This is a big problem.” She adds that comprehensive rare-disease centers, where paid patient representatives collaborate directly with clinicians and researchers, would help bridge the gap between care and lived experience. * Research and diagnostics: Nordgren also points to the need for better long-term investment in genomic medicine and data infrastructure. Sweden is a leader in diagnostics through Genomic Medicine Sweden and SciLifeLab, but funding for advanced genomic testing, especially for adults, remains limited. “Many rare diseases still lack sufficient funding for basic and translational research,” she says, leading to delays in identifying genetic causes and developing targeted therapies. She argues for a national health care data platform integrating electronic records, omics (biological) data and patient-reported outcomes — built with semantic standards such as openEHR and SNOMED CT — to enable secure sharing, AI-driven discovery and patient access to their own data DELIVERING BREAKTHROUGHS Breakthroughs are coming. The question is whether Europe will be ready to deliver them equitably and at speed, or whether patients will continue to wait while therapies sit on the shelf. There is reason for optimism. The Nordic region has the talent, infrastructure and tradition of fairness to set the European benchmark on rare-disease care. But leadership requires urgency, and collaboration across the EU will be essential to ensure solutions are shared and implemented across borders. The need for action is clear: * Establish long-term governance and funding for rare-disease infrastructure. * Provide stable, structural support for patient organizations. * Create clearer, better-coordinated care pathways. * Invest more in research, diagnostics and equitable access to innovative treatments. Early access is not only fair — it is cost-saving. Patients treated earlier incur lower indirect and non-medical costs over time.[10] Inaction, by contrast, compounds the burden for patients, families and health systems alike. Science will forge ahead. The task now is to sustain momentum and reform systems so that no rare-disease patient in the Nordics, or anywhere in Europe, is left waiting. -------------------------------------------------------------------------------- [1] https://nordicrarediseasesummit.org/wp-content/uploads/2025/02/25.02-Nordic-Roadmap-for-Rare-Diseases.pdf [2] https://nordicrarediseasesummit.org/wp-content/uploads/2025/02/25.02-Nordic-Roadmap-for-Rare-Diseases.pdf [3] https://media.crai.com/wp-content/uploads/2024/10/28114611/CRA-Alexion-Quantifying-the-Burden-of-RD-in-Europe-Full-report-October2024.pdf [4] https://media.crai.com/wp-content/uploads/2024/10/28114611/CRA-Alexion-Quantifying-the-Burden-of-RD-in-Europe-Full-report-October2024.pdf [5] https://media.crai.com/wp-content/uploads/2024/10/28114611/CRA-Alexion-Quantifying-the-Burden-of-RD-in-Europe-Full-report-October2024.pdf [6] https://www.theparliamentmagazine.eu/partner/article/a-competitive-and-innovationled-europe-starts-with-rare-diseases? [7] https://www.iqvia.com/-/media/iqvia/pdfs/library/publications/efpia-patients-wait-indicator-2024.pdf [8] https://www.iqvia.com/-/media/iqvia/pdfs/library/publications/efpia-patients-wait-indicator-2024.pdf [9] https://copenhageneconomics.com/wp-content/uploads/2025/09/Copenhagen-Economics_Spending-on-OMPs-across-Europe.pdf [10] https://media.crai.com/wp-content/uploads/2024/10/28114611/CRA-Alexion-Quantifying-the-Burden-of-RD-in-Europe-Full-report-October2024.pdf Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Alexion Pharmaceuticals * The entity ultimately controlling the sponsor: AstraZeneca plc * The political advertisement is linked to policy advocacy around rare disease governance, funding, and equitable access to diagnosis and treatment across Europe More information here.

LONDON — The U.K. has agreed to raise how much its National Health Service spends on new drugs, in a concession made under pressure from the Trump administration in return for tariff-free access to the U.S. market. “Today’s agreement is a major win for American workers and our innovation economy,” U.S. Commerce Secretary Howard Lutnick said in a statement on Monday. “This deal doesn’t just deepen our economic partnership with the United Kingdom — it ensures that the breakthroughs of tomorrow will be built, tested, and produced on American soil.”  The deal will see Britain increase the National Institute for Health and Care Excellence (NICE) cost-effectiveness threshold by 25 percent, as POLITICO first reported in October, and slash the cap on revenue the NHS can reclaim from drugmakers to no more than 15 percent.  The new NICE threshold will be £25,000 to £35,000 per quality adjusted life year gained over and above current treatments. The U.S. said the combined changes would increase the net price the NHS pays for new medicines by 25 percent. In exchange, the administration will grant an exemption for U.K.-made pharmaceuticals, ingredients and medical technology from U.S. tariffs for the remainder of President Donald Trump’s term.  U.K. Business and Trade Secretary Peter Kyle said: “This deal guarantees that UK pharmaceutical exports – worth at least £5 billion a year – will enter the US tariff free, protecting jobs, boosting investment and paving the way for the UK to become a global hub for life sciences. “We will continue to build on the UK-US Economic Prosperity Deal, and the record-breaking investments we secured during the US State Visit, to create jobs and raise living standards as part of our Plan for Change.” The breakthrough comes after months of back-and-forth between both sides, with the sector not covered in the Economic Prosperity Deal and Washington demanding a “preferential environment” to lift the threat of steep import duties. The administration had threatened to impose up to 100 percent tariffs on drugs.  In July, the President issued a letter to 17 drugmakers, demanding they offer their drugs to Medicaid at most-favored-nation prices, prices tied to lower prices abroad, and shift manufacturing to U.S. soil.  Update: This story has been updated following confirmation from the U.S. and U.K. governments.

BRUSSELS — Europe’s most energy-intensive industries are worried the European Union’s carbon border tax will go too soft on heavily polluting goods imported from China, Brazil and the United States — undermining the whole purpose of the measure. From the start of next year, Brussels will charge a fee on goods like cement, iron, steel, aluminum and fertilizer imported from countries with weaker emissions standards than the EU’s. The point of the law, known as the Carbon Border Adjustment Mechanism, is to make sure dirtier imports don’t have an unfair advantage over EU-made products, which are charged around €80 for every ton of carbon dioxide they emit. One of the main conundrums for the EU is how to calculate the carbon footprint of imports when the producers don’t give precise emissions data. According to draft EU laws obtained by POLITICO, the European Commission is considering using default formulas that EU companies say are far too generous. Two documents in particular have raised eyebrows. One contains draft benchmarks to assess the carbon footprint of imported CBAM goods, while the second — an Excel sheet seen by POLITICO — shows default CO2 emissions values for the production of these products in foreign countries. These documents are still subject to change. National experts from EU countries discussed the controversial texts last Wednesday during a closed-door meeting, and asked the Commission to rework them before they can be adopted. That’s expected to happen over the next few weeks, according to two people with knowledge of the talks. Multiple industry representatives told POLITICO that the proposed estimated carbon footprint values are too low for a number of countries, which risks undermining the efficiency of the CBAM. For example, some steel products from China, Brazil and the United States have much lower assumed emissions than equivalent products made in the EU, according to the tables. Ola Hansén, public affairs director of the green steel manufacturer Stegra, said he had been “surprised” by the draft default values that have been circulating, because they suggest that CO2 emissions for some steel production routes in the EU were higher than in China, which seemed “odd.” “Our recommendation would be [to] adjust the values, but go ahead with the [CBAM] framework and then improve it over time,” he said. Antoine Hoxha, director general of industry association Fertilizers Europe, also said he found the proposed default values “quite low” for certain elements, like urea, used to manufacture fertilizers. “The result is not exactly what we would have thought,” he said, adding there is “room for improvement.” But he also noted that the Commission is trying “to do a good job but they are extremely overwhelmed … It’s a lot of work in a very short period of time.” Multiple industry representatives told POLITICO that the proposed estimated carbon footprint values are too low for a number of countries, which risks undermining the efficiency of the CBAM. | Photo by VCG via Getty Images While a weak CBAM would be bad for many emissions-intensive, trade-exposed industries in the EU, it’s likely to please sectors relying on cheap imports of CBAM goods — such as European farmers that import fertilizer — as well as EU trade partners that have complained the measure is a barrier to global free trade. The European Commission declined to comment. DEFAULT VERSUS REAL EMISSIONS Getting this data right is crucial to ensure the mechanism works and encourages companies to lower their emissions to pay a lower CBAM fee. “Inconsistencies in the figures of default values and benchmarks would dilute the incentive for cleaner production processes and allow high-emission imports to enter the EU market with insufficient carbon costs,” said one CBAM industry representative, granted anonymity to discuss the sensitive talks. “This could result in a CBAM that is not only significantly less effective but most likely counterproductive.” The default values for CO2 emissions are like a stick. When the legislation was designed, they were expected to be set quite high to “punish importers that are not providing real emission data,” and encourage companies to report their actual emissions to pay a lower CBAM fee, said Leon de Graaf, acting president of the Business for CBAM Coalition. But if these default values are too low then importers no longer have any incentive to provide their real emissions data. They risk making the CBAM less effective because it allows imported goods to appear cleaner than they really are, he said. The Commission is under pressure to adopt these EU acts quickly as they’re needed to set the last technical details for the implementation of the CBAM, which applies from Jan. 1. However, de Graaf warned against rushing that process. On the one hand, importers “needed clarity yesterday” because they are currently agreeing import deals for next year and at the moment “cannot calculate what their CBAM cost will be,” he said. But European importers are worried too, because once adopted the default emission values will apply for the next two years, the draft documents suggest. The CBAM regulation states that the default values “shall be revised periodically.” “It means that if they are wrong now … they will hurt certain EU producers for at least two years,” de Graaf said.

LONDON — Britain’s biggest drugmaker says it will only give the greenlight to plans for a £200 million Cambridge research site if ministers go further on NHS spending reforms in their trade negotiations with the United States. The U.K. has drawn up proposals to increase the amount the state-funded National Health Service is allowed to pay pharmaceutical firms for drugs after intense discussions with officials from the Trump administration. But AstraZeneca CEO Pascal Soriot is pushing for a bigger increase to the threshold that determines how much the NHS can spend on new medicines — the benchmark used by NICE to judge whether a treatment is worth the cost. “I will invest where I believe my products are going to be used,” said Soriot in a call with reporters on Thursday, responding to questions about the Cambridge site. “Otherwise, you do trials that lead to nothing, and it’s a frustration for physicians, for patients, and for us.”  AstraZeneca paused plans for the £200 million Cambridge research center in September.  Ministers have proposed a 25 percent boost to the NHS’s drug-pricing threshold as part of ongoing negotiations with the Trump administration around looming pharmaceutical tariffs. The U.S. Ambassador to the U.K. Warren Stephens warned British ministers on Wednesday that American pharmaceutical giants will start to shutter their U.K. operations unless Keir Starmer’s government agrees to pay more for their drugs. AstraZeneca’s Soriot, who struck a three-year tariff relief deal with the Trump administration last month, wants to push the NHS spending threshold higher so that it can buy drugs costing £40,000-£50,000 per year of healthy life gained, up from around £20,000-£30,000 today.  “This number has not been adjusted for more than 20 years, so we would need to see a substantial adjustment based on the amount of inflation that has taken place, and that’s the only way to improve access for patients,” he said.  Soriot also said the government would need to substantially adjust its “clawback” system — known as the Voluntary Scheme for Pricing, Access and Growth (VPAG) — where firms have to pay back part of their revenue if NHS spending on drugs exceeds a cap.  “If you get a better price  […] but then you get a big rebate later on, it really doesn’t help either,” he said.  But AstraZeneca CEO Pascal Soriot is pushing for a bigger increase to the threshold that determines how much the NHS can spend on new medicines. | Pool photo by Shawn Thew/EPA Without these changes, Soriot warned pharmaceutical investment will continue flowing elsewhere, including to the U.S. and China. If things “continued to deteriorate the way they do […] it’s actually possible” that the U.K. may become a country down the line that may only have access to generics and no innovation, he said.  As British officials seek to negotiate a solution with their U.S. counterparts in Washington this week, ahead of the U.K. budget on Nov. 26, Soriot argued that higher spending now would pay off in the long run. “Every government has financial constraints, of course, but that’s why I’m saying that those changes will only apply to new products, and the impact on budgets would come over time,” he said, adding that “in the meantime, it would generate investment from pharmaceutical companies.” 

BRUSSELS — Belgium’s refusal to back a multibillion-euro EU loan to Ukraine could prompt the International Monetary Fund to block financial support for Kyiv — resulting in a cascading loss of confidence in the war-torn country’s economic viability, EU officials warn. European supporters of the controversial €140 billion “reparations loan,” backed by Russian state assets frozen in the EU, argue the IMF’s continued support for Ukraine is crucial, and fear time is running out to convince the institution to grant new loans to Kyiv. Ukraine is facing a massive budget shortfall and desperately needs funding from the IMF to continue defending itself against Russia’s full-scale invasion. The IMF is considering lending $8 billion to Kyiv over the next three years. But hopes of securing the IMF’s financial backing hinge on whether the EU can finalize its own €140 billion loan to Ukraine using frozen Russian state assets that are mostly held in Belgium. One European Commission official and diplomats from three member countries said that securing such an agreement will convince the IMF that Ukraine is financially viable for the coming years — a requirement for the Washington-based institution to bankroll any country. But last month, Belgium opposed the loan during a meeting of EU leaders over financial and legal concerns, dampening hopes of finalizing an agreement in time for a crucial IMF meeting that is likely to be held in December. “We are facing a timeline issue,” said an EU official who, like others quoted in this story, was granted anonymity to speak freely. They pointed to the fact that the next gathering of EU leaders is only slated for Dec. 18 and 19 — underscoring the need for more urgent solutions. With the U.S. significantly downsizing its support to Ukraine, the IMF expects the EU to bear the brunt of its financial needs in the coming years. While the size of the IMF’s program for Ukraine is relatively small, its approval signals to investors that the country is financially viable and on track with its reforms. EU leaders stripped a reference to the €140 billion Ukraine loan from the official Council conclusions as a concession to Belgium. | Nicolas Economou/Getty Images “It’s a benchmark for other countries and institutions to evaluate whether Ukraine is doing proper governance,” said a Ukrainian official. IMF experts will visit Kyiv in November to discuss the program for the next three years. “[The IMF’s support] is something that we should not play with,” the EU official added. The IMF did not respond to POLITICO’s request for comment. WHY THE €140 BILLION LOAN MATTERS During their last summit, EU leaders stripped a reference to the €140 billion Ukraine loan from the official Council conclusions as a concession to Belgium. The watered-down text merely “invites the Commission to present, as soon as possible, options for financial support based on an assessment of Ukraine’s financing needs.” Crucially, the text falls short of indicating specific actions to meet these goals. Such vague and open-ended wording is unlikely to satisfy the IMF’s concerns on Ukraine’s finances, said one EU official and two EU diplomats. Stronger measures could involve issuing a legal proposal for the €140 billion loan, adopting stronger conclusions during a meeting of finance ministers or calling an extraordinary leaders’ summit, they said. In order to strengthen Ukraine’s economic credentials, the EU is also telling the IMF that Kyiv won’t have to repay the €140 billion loan in the years to come. Brussels insists that the loan would only be paid back to Moscow if the Kremlin ends its war in Ukraine and pays reparations to Kyiv — which is seen as an unlikely scenario. “There is no universe in which Ukraine needs to come up with the money itself,” said another EU official. “It either gets the money from Russia or doesn’t give it back. As far as Ukraine is concerned, it’s a good as a grant.” CORRECTION: This article has been updated to correct the amount of money the IMF is considering lending to Ukraine.

BRUSSELS — Romania wants Europe’s rearmament push to benefit all EU nations, not just the largest ones. The massive increase in defense spending and weapons orders that is foreseen in the coming years should translate into new factories and jobs in his country, Romania’s Defense Minister Liviu-Ionuț Moșteanu told POLITICO. “If we spend people’s money on defense, it’s important for them to see that part of it is coming back to their country, for example via factories. It’s not just about buying rockets abroad,” he said in an interview at NATO headquarters. “We aim to have a part of the production in the country. We want to be part of the production chain,” he added. “Every country wants to have a big share, but so far only a few do.” Western nations such as France, Germany, Italy and Sweden have the bloc’s best-developed arms industries and are grabbing the majority of lucrative arms contracts. Former eastern bloc countries like Romania tend to have smaller defense companies without the technological know-how to produce the full array of weapons needed to rearm, meaning they are more dependent on external suppliers. Russia’s invasion of Ukraine has opened the money taps for defense. NATO countries agreed this summer to boost their defense spending target from 2 percent of gross domestic product to 5 percent by 2035. According to the European Commission, reaching the new target will require an additional €288 billion spent on defense each year. Romania is spending 2.3 percent of its GDP on the military this year and plans to raise that to 3.5 percent by 2030. One of its main challenges is to modernize its armed forces, which have operated for decades largely with obsolete Soviet-era military kit. The country, which borders Ukraine, Moldova and the Black Sea as well as EU countries, is key to regional security in southeastern Europe and hosts a NATO battlegroup led by France that also includes American troops. LOANS FOR WEAPONS Bucharest is set to be the second-largest user of the EU’s €150 billion SAFE scheme, and is asking for €16.7 billion in low interest loans for defense. Moșteanu said two-thirds of that money will be spent on military equipment and the remaining third on infrastructure; it also includes military aid to Ukraine and Moldova. The condition for any procurement under SAFE — which is open mostly to European companies — would be industrial returns in Romania, the minister told POLITICO. The condition for any procurement under SAFE — which is open mostly to European companies — would be industrial returns in Romania, the minister told POLITICO. | Thierry Monasse/Getty Images In one example of the country’s push to ensure some defense cash stays at home, an ongoing €6.5 billion tender for more than 200 tanks sets a condition that final assembly happen in the country. “It’s very important for the years to come that when we talk about spending money, we spread [the industrial return] evenly throughout the continent,” the minister said, referring also to countries further from the frontlines such as Portugal. “It’s a negotiation with the producers,” he said, adding that if European manufacturers don’t accept domestic production requirements, Bucharest will take its money to companies outside the EU that are willing to do so. “If some programs don’t look good under SAFE, we’ll move them under the national budget,” he stressed. The Romanian government is already a big customer of foreign weapons manufacturers, especially from the U.S., Israel and South Korea. It recently purchased American-made Patriot air defense systems and F-35 warplanes, as well as K9 self-propelled howitzers from South Korea’s Hanwha Aerospace. Last year, Hanwha Aerospace executives told POLITICO that Romania could become a weapons production hub for Europe, the Middle East and Africa. WHAT ROMANIA BRINGS TO THE TABLE Romania, which is one of Europe’s most industrialized countries, has assets to offer arms-makers, Moșteanu argued. Romania, which is one of Europe’s most industrialized countries, has assets to offer arms-makers, Moșteanu argued. | Andreea Campeanu/Getty Images It’s already luring in some of Europe’s largest defense companies: Bucharest and German giant Rheinmetall signed an agreement earlier this year to build an ammunition powder plant that will be partly funded by EU money under the Act in Support of Ammunition Production scheme. In the near future, manufacturers will need to open new factories to meet demand, and Romania could easily host some of them, Moșteanu said: “We have defense production facilities with all the necessary approvals. They’re not up-to-date but it’s a good starting point.” Another strength of the country is its robust automotive sector, which could help weapons manufacturers swiftly ramp up manufacturing. Defense companies across the bloc are teaming up with carmakers to benefit from their mass production expertise. “We have a very strong automotive industry in Romania that can switch to the defense industry,” the minister said, adding that the machinery, production lines, expertise and supply chains are already in place. Romania is also looking to cut red tape. “We’re looking to change the legislation to speed investments in the defense industry. I know there is the defense omnibus in Brussels,” Moșteanu said, referring to the European Commission’s simplification package, “but I don’t know when it’ll come, I prefer to have something quick.”

Warning signs from an obscure part of the financial markets have got policymakers rattled, and one of their oldest and most profound fears may be about to get very real. As the world’s top central bankers and finance ministers descend on Washington for the annual meetings of the International Monetary Fund and World Bank, signs are increasing that the next bout of financial instability may be around the corner. The most worrying signs are arguably not from the foreign exchange market, where confidence in the dollar — the global system’s anchor — is gradually eroding, nor from the stock market, where the AI frenzy has driven equities to record highs in the U.S. and Europe. Rather, it’s what’s happening in the credit markets that’s sending a shiver down the spine of all those who remember 2008. The collapse of U.S. auto loan dealer Tricolor and parts supplier First Brands Group hints that something may be wrong in the world of private credit. Private credit refers to loans that are neither issued by banks nor publicly traded on an exchange like corporate bonds. It’s a broad description, and it can refer to anything from the aforementioned car loans issued by special credit suppliers to private funds lending money to help buy a family-owned company or financing for a new apartment block. It’s a young market, but has grown at breakneck speed. Goldman Sachs estimates it’s worth $2.1 trillion, and private equity companies, in particular, have made a fortune from it, helped by a vast amount of leverage. Because the money isn’t lent by banks, and because it’s structured as a private deal off the public markets, it’s a corner of the financial ecosystem that’s particularly hard to oversee — even when, as with Tricolor, the loans are then repackaged into tradable bonds. That means that if something is going disastrously wrong, it might only be detected once it’s too late. Officials are alarmed that something like that might be happening. For years, banking regulators have congratulated themselves on stamping out the kind of excessive risk-taking, questionable ethics and shoddy governance that caused the last financial crisis. But all along, they have fretted that, far from being dead, such behavior had just moved to other parts of the financial system outside their reach. In a speech last week, European Central Bank President Christine Lagarde warned that it was “imperative” to improve transparency in the non-bank financial sector, whose assets are now bigger than those of the regulated banking sector. “Policymakers must do so sooner rather than later,” she said. The Bank of England also took up the theme earlier this week, its Financial Policy Committee warning that “the risk of a sharp market correction has increased.” It said the defaults in the U.S. “underscore some of the risks the FPC has previously highlighted around high leverage, weak underwriting standards, opacity, and complex structures.” THE WHEELS COME OFF Texas-based Tricolor was an auto loan provider that lent to riskier clients, notably undocumented migrants. First Brands, meanwhile, is a car parts supplier that used opaque and complex financing schemes to pay its suppliers — until it wasn’t able to anymore. One of its creditors, Raistone, alleges that some $2.3 billion that it was owed “simply vanished.” Shares of investment bank Jefferies tumbled this week after it declared it had $715 million in exposure to First Brands. Swiss giant UBS, meanwhile, says it has $500 million at risk. The big question is whether the twin bankruptcies — concentrated in an inherently riskier segment of the market — are just two accidentally similar one-offs, or whether they are the first signs of a broader crisis brewing. Credit rating agency Fitch said defaults in the private credit market rose to 5.5 percent in the second quarter of the year, up from 4.5 percent in the first quarter. Meanwhile, in January, Fitch said auto loan payments that were 60 or more days late among the least creditworthy (subprime) borrowers were at the highest level on record, at 6.6 percent. A growing body of academic literature has found extensive links between non-bank financial institutions (NBFIs) — a category that includes hedge funds and private equity, as well as private credit — and the traditional banking sector. “Through these linkages, shocks can propagate rapidly across entities, sectors, or jurisdictions, especially when multiple institutions respond simultaneously to market stress,” said the authors of a paper at this year’s ECB research conference in Sintra, Portugal. They wrote that nearly one tenth of banks’ assets in the European Union were claims on NBFIs, and that 10-15 percent of banks’ deposits also came from non-banks. Loriana Pelizzon, deputy scientific director at the Leibniz Institute for Financial Research and one of the authors of the paper, said she wasn’t overly concerned about the two bankruptcies, given the relatively small size of the auto financing market. However, she said that interlinkages between European NBFIs and the U.S. financial system needed to be monitored, given the scale of the investments. “There’s a significant amount — trillions and trillions invested — in the U.S.,” she said, noting that investment chains are often long and complex, and that regulators lack insight into them. “The question is whether this is just a couple of rotten apples,” said Davide Oneglia, director at economic consultancy TS Lombard. He said that the risk in the private credit segment will grow further if U.S. interest rates don’t fall as quickly as expected, for example, due to high inflation. That would put a further squeeze on private credit providers. IN PLAIN SIGHT But it’s not just private credit that has policymakers on tenterhooks. The benchmark U.S. stock index S&P 500 is now trading at nearly 30 times the expected earnings of its components, far above its long-run average, and closer to the freak levels seen during the Dotcom boom and the pandemic. Over the last three years, the S&P has risen over 80 percent, largely powered by the performance of U.S. tech stocks on the back of a boom in AI investment. Companies have invested some $400 billion to build out the infrastructure — microchip factories and data centers — that powers AI. Should that money turn out to be misspent, for example, if AI doesn’t provide the productivity gains that investors are betting on, that bubble will burst with painful consequences. In parallel, unbridled government spending throughout the developed world, from the U.S., to Europe and Japan, have pushed market interest rates higher, amid growing doubts that governments can ever repay the debts they are building up. That has also helped push the price of gold — seen as a safe asset that won’t lose value — higher, with some investors piling into both gold and Bitcoin to avoid the debasement of their investments through inflation. It’s not clear which of these — if any — will light the wick of the next global financial meltdown. But what is clear is that policymakers will have no shortage of threats to obsess over next week.

Europe acknowledges the need to acquire more military equipment jointly. Collective procurement is not only a question of scale and efficiency, but also of interoperability, fiscal prudence and strengthening the continent’s defense industrial base. Yet, according to the EU’s own metrics, only 18 percent of defense acquisitions are currently made jointly — far below the benchmark of 35 percent. The problem is not only political will. Defense procurement requires a financial backbone: institutions capable of arranging contracts, securing loans, mitigating risk and guaranteeing delivery.  The debate around the European Parliament’s European Defence Readiness 2030 report highlights precisely this gap — between the battlefield urgency on Europe’s eastern flank and the institutional ability to mobilize capital at speed. The EU recognizes the role of access to capital. Through the SAFE Regulation, member states receive the means to rapidly scale up their investment via common procurement. The European Commission has recently tentatively allocated €43.7 billion in loans to Poland, as part of over €150 billion in requests submitted by 19 member states. National sovereignty and allied cooperation Defense spending remains, by EU Treaties and by practice, a core competence of member states. Ministries of defense and finance retain control of procurement, deciding when and how to buy tanks, missiles or aircrafts. Yet national sovereignty does not preclude European solidarity. Recent violation of Polish airspace by Russian drones underscores the immediacy of the threat of Russian aggression. Multiple intelligence assessments pointing to a window of 2028 as a potential milestone for Moscow’s capabilities threatening a full-scale attack on the EU leaves little doubt: Europe must be ready to defend itself. > Multiple intelligence assessments pointing to a window of 2028 as a potential > milestone for Moscow’s capabilities threatening a full-scale attack on the EU > leaves little doubt: Europe must be ready to defend itself. Prof. Marta Postuła, First Vice President of the Management Board, Bank Gospodarstwa Krajowego Via Polish Development Bank This urgency is compounded by the limited availability of off-the-shelf military equipment in Europe. Domestic producers, already stretched by support for Ukraine and long-term procurement cycles, cannot simply deliver entire brigades of tanks or missile systems within months. For immediate needs, allied suppliers — particularly the United States and South Korea — remain indispensable. Their industrial scale provides Europe with the breathing space to build capacity while ensuring that equipment is deployed without delay. Against this backdrop, cooperation with allied third-country defense suppliers is not a deviation from European autonomy, but a necessary pillar of strategic resilience. By leveraging trusted partners’ industrial capacities while localizing parts of the production and supply chains, EU members can both accelerate readiness and anchor new defense ecosystems within Europe. Poland’s financial innovation in defense procurement Poland offers a striking case study. Confronted with the immediate threat posed by Russia after the invasion into Ukraine, Warsaw faced the need to rearm at unprecedented speed and scale. Traditional budget channels were insufficient. To bridge the gap, the government established the Armed Forces Support Fund, operated by Bank Gospodarstwa Krajowego (BGK), Poland’s national development bank. BGK created an innovative financing mechanism, combining state guarantees with international debt instruments, to secure cost-effective, large-volume funding for defense contracts. By mid-2025 BGK had raised the equivalent of over 172 billion złoty (approximately €40 billion) to finance contracts with suppliers from the United States, South Korea, the United Kingdom, Sweden and Norway. > BGK created an innovative financing mechanism, combining state guarantees with > international debt instruments, to secure cost-effective, large-volume funding > for defense contracts. Incorporating market-based financing into defense expenditure necessitates close coordination with the State Treasury and a proactive investor relations strategy. BGK has developed significant expertise in this area, working closely with the Ministry of Finance to align bond issuance strategies and investor communications. This includes joint non-deal roadshows and regular engagement with major investors. By establishing yield curves in  złoty, euros and the U.S. dollar through the issuance of highly liquid benchmark securities, BGK enhances its ability to flexibly supplement financing defense expenditure with bond market instruments. The fund’s design offers important lessons for Europe. It blends flexibility, sovereign backing, and transparency while drawing on global financial markets. BGK has relied extensively on export credit agencies in supplier countries, ensuring financing conditions aligned with the payment structures of Poland’s contracts. This has enabled Warsaw not only to secure rapid delivery of equipment but also to negotiate significant offsets — embedding parts of production and technology transfer inside Poland. This focus on cost-effectiveness led to financing arranged at rates comparable to — or even below — State Treasury bonds, a result previously thought unattainable by any bank, including state development institutions. Two recent agreements illustrate the model’s significance In July 2025 BGK signed a new framework with the Export-Import Bank of Korea and Korea Trade Insurance Corporation, extending its capacity to finance Poland’s acquisition of Korean heavy equipment. These contracts have gone beyond simple purchase orders. They combine direct financing, credit guarantees and technology transfer, ensuring that segments of the supply chain — from components to maintenance hubs — are localized in Poland. This strengthens both Poland’s and the EU’s defense autonomy, while anchoring South Korea as a trusted industrial partner. In parallel, BGK has become an active borrower under Washington’s Foreign Military Financing (FMF) program, a rare privilege usually reserved for close allies. To date, Poland has secured more than $15 billion in loans and guarantees under FMF, with the most recent $4 billion tranche signed in July 2025. These funds are channeled directly into purchases under the US Foreign Military Sales framework, covering advanced systems from air defense to artillery. Crucially, offsets negotiated under these contracts ensure partial production and servicing in Poland, effectively localizing parts of the supply chain within the EU. Together, these examples illustrate how alliance-based procurement can serve a triple function: accelerating access to critical capabilities while embedding industrial benefits in Europe and anchoring defense through trade partnerships. Towards a European defense financing architecture The Polish case underscores a broader truth: defense procurement requires dedicated financial vehicles, not ad hoc budget reallocations. Here, National Promotional Banks and Institutions (NPBIs) — state-owned banks already active in infrastructure and industrial financing — can play a transformative role across the EU. NPBIs are uniquely positioned to deliver what Europe now needs most: speed, trust and cost-effective financing. Backed by sovereign mandates, they operate with the full confidence of national governments, which allows them to channel money into defense budgets without the political friction that accompanies private lenders. Because they combine sovereign guarantees with market instruments, they are also able to secure capital more cheaply than ministries or agencies acting alone — a critical advantage, as member states face both higher interest rates and tighter fiscal space. > NPBIs are uniquely positioned to deliver what Europe now needs most: speed, > trust and cost-effective financing. Equally important is their agility. Unlike supranational institutions, which often operate with long lead times, NPBIs can structure loans, guarantees or even bond issuances in line with the payment calendars of procurement contracts. This flexibility ensures that funds flow precisely when needed, securing delivery schedules for complex, multi-year defense projects. NPBIs also bring the capacity to absorb and distribute risk. By offering guarantees to defense manufacturers, they give industry the confidence to scale up production, expand supply chains and invest in new facilities. This risk-sharing function is especially valuable for Europe’s fragmented defense industry, where smaller firms often hesitate to commit capital without visibility on future orders. Their cross-border potential should not be overlooked. While firmly anchored in national sovereignty, NPBIs can cooperate under EU frameworks to finance pooled orders — whether for air defense systems, ammunition or mobility assets. Regional clusters of member states could rely on their national institutions to co-finance joint purchases, balancing respect for national control with the benefits of collective scale. In effect, NPBIs represent the missing link between European-level political commitments and the financial realities of procurement. They are not abstract instruments, but practical engines capable of turning collective ambitions into bankable contracts.

Treasury Secretary Scott Bessent has weathered market turbulence from President Donald Trump’s trade wars, the administration’s clashes with the Federal Reserve and battles with fellow officials. But his biggest challenge may lie ahead, with signs that the economy is faltering just eight months into the Trump presidency. Throughout Trump’s second term, Bessent has built strong credibility with financial markets even amid significant policy confusion and bolstered his relationship with the president, cementing his role as a power center in the administration. Stocks have continued to climb even as tariffs have eaten into corporate profits and growth has slowed. Now, however, the labor market is losing momentum, while inflation is ticking back up. The housing market is largely frozen because of high mortgage rates, and swelling fiscal deficits are fueling pressure on the cost of government debt. A more painful economic slowdown, particularly one accompanied by falling markets, would test Bessent’s mettle in new ways. “There’s a high degree of confidence right now in the competency of the team at Treasury,” said one person close to the White House who was granted anonymity to speak more freely about administration personnel. But “there are some concerns about whether these problems are just unmanageable, without a lot of pain. There’s going to be pain. The question is … what can you do to mitigate it?” Bessent has maintained a reputation on Wall Street as being level-headed and rational, despite whipsawing trade policies and high-profile conflicts with other Trump advisers, such as Elon Musk, and most recently, housing finance regulator Bill Pulte. POLITICO reported that Bessent threatened to punch Pulte at a private dinner attended by dozens of other people after Pulte allegedly badmouthed him to the president. Regardless of that episode, Bessent has demonstrated considerable staying power in the administration. “He is a calming force,” said Scott Wren, senior global market strategist for Wells Fargo Investment Institute. “The financial markets in general have some confidence that things aren’t going to go too far off the rails if he has a lot of influence.” People familiar with their relationship say Bessent enjoys a particularly close relationship with Trump that is centered on the president’s respect for the Treasury chief’s advice. “He got picked because he convinced the president that he could give the president honest analysis of different policies and what the outcomes might be of those policies,” said a second person close to the White House, also granted anonymity. “Let’s just say, President Trump respecting the judgment of others on things he himself knows a lot about is not [his] usual approach to things.” “Scott has given him good advice,” another person with close ties to the administration said. “There are weird scenarios where [Trump] doesn’t quite want the yes person. He wants to be told not no, but not yes.” That confidence in Bessent has been vindicated by the seemingly positive feedback loop between him and markets. Stocks plunged in early April when Trump announced his sweeping new tariff regime, where the levies were set much higher than investors were expecting. Stress in bond markets prompted the president to change course, partly based on Bessent’s counsel. Trump then made Bessent one of his lead trade negotiators — and equities have since steadily recovered, repeatedly hitting fresh record highs in recent months. The Treasury chief was also an important voice in advising the president that he was risking market turmoil if he were to attempt to remove Fed Chair Jerome Powell. Another indicator of Bessent’s relationship with markets: Yields on government debt that matures in 10 years — a key benchmark for mortgages and consumer loans and a central focus for Bessent — have eased during his tenure even as bond investors have grown more nervous about the ballooning federal debt. But Bessent can’t count on faith from markets alone to maintain his reputation. Stocks have been driven upward by the artificial intelligence boom, and the economy has held up better than many feared in the wake of the highest tariffs in a century. A pessimistic turn on either front could lead to a sudden plunge in markets, as could other unexpected shocks. “You should never, as a policymaker, take credit for what happened to equity prices,” said Vincent Reinhart, chief economist of investments at BNY. “It can break your heart a couple of weeks later — or sooner than that.” Still, people close to the administration said Bessent has enough goodwill as a communicator on behalf of the president that he’s likely to remain a central figure even in the event of an economic crisis. “Scott is one of the most respected members of the administration,” the first person close to the White House said. “Period.”

PARIS — In France, getting rid of governments is now about as commonplace as complaining about them. François Bayrou is bracing to become the latest prime minister to get the chop on Monday ― primarily because of discontent over his spending plans for next year ― leaving President Emmanuel Macron on the hunt for a fifth PM in less than two years. The political crisis could have ramifications far beyond the halls of power in Paris if lawmakers can’t figure out how to rein in runaway public spending and a massive budget deficit. Here’s everything you need to know about the drama ahead: HE’S DEFINITELY GOING, RIGHT? Yes, it’s pretty much nailed on that Bayrou will fall. Anything else would need a last-minute U-turn from a big chunk of opposition lawmakers, and that would be a massive shock. His fate seem sealed in the hours after he unveiled his plan for a confidence vote late last month, when leaders from the far-left France Unbowed, far-right National Rally and center-left Socialist Party all announced they would vote to bring down the government. Neither Bayrou’s PR blitz nor his meetings with political leaders last week appear to have moved the needle. SO WHAT’S HAPPENING MONDAY? Bayrou is delivering what’s known as a d´eclaration de politique générale (general policy statement), a speech traditionally given at the outset of a prime minister’s tenure to lay out an incoming government’s platform and priorities. (It’s a bit like a state of the union.) The longtime centrist is using this one to make the case for his unpopular 2026 budget. Prime ministers often follow their addresses with a confidence vote to ensure support for their agendas, though they aren’t constitutionally obliged to do so. Bayrou didn’t hold a vote after his January DPG, nor did any of his predecessors during Macron’s second term. Christophe Petit Tesson/EPA This time, he will. Bayrou has tried to frame the vote as a referendum on the need for drastic action to balance the books and has quibbled with the French media’s framing of Monday’s drama as a confidence vote or censure. But in practice, that’s what it is. HOW WILL THE DAY UNFOLD? Bayrou’s speech will begin at 3 p.m. in the National Assembly in Paris, France’s more-powerful lower house of parliament. Representatives from each political party will follow, with each of their speaking times determined by how many seats they have. Then the prime minister will have the opportunity to deliver closing remarks. Voting should take place around 7 p.m. or 8 p.m. and should last about 30 minutes, after which the president of the National Assembly will announce the results. Macron’s office has not yet said whether he will speak following the vote. When ex-Prime Minister Michel Barnier was toppled in December, Macron waited 24 hours to deliver a primetime address. HOW DID WE GET HERE? Let’s rewind to June 9, 2024, when the far-right National Rally scored a huge win in the European election. Macron responded by dissolving parliament, a massive bet that backfired in spectacular fashion. In the ensuing vote, an alliance of left-leaning political parties won more seats than any other political force, but fell short of an absolute majority. After nearly two months without a proper government, Macron’s centrists and the center-right conservatives agreed to form a minority coalition led by former Brexit negotiator Barnier. Barnier lasted three months, taken down in December over his plan to trim the 2025 budget to help rein in runaway public spending. Macron replaced Barnier with Bayrou, who in July presented a plan to squeeze next year’s budget by €43.8 billion to get the budget deficit down from a projected 5.4 percent of gross domestic product this year to 4.6 percent of GDP in 2026. Opposition lawmakers howled in fury at the plan, which included axing two public holidays. In late August, as the French started to trickle back from their summer vacations, Bayrou stunned the country by announcing that he would hold a confidence vote on his spending plans before what were expected to be tense negotiations. SHOULD I CARE? Yes, because the ensuing crisis in the eurozone’s second-biggest economy could drag the entire bloc into a debt-fueled financial crisis, according to Bayrou. France was able to stave off an economic catastrophe during the pandemic and when energy prices shot up at the outset of the full-scale war in Ukraine, in part thanks to massive public spending. Finding a consensus on reining in expenditures has proven difficult, and lawmakers are loath to tighten their belts as aggressively as Bayrou wants. His plan would bring France’s budget deficit down from a projected 5.6 percent of GDP this year to 4.6 percent in 2026. The ultimate goal is to bring that figure down to 3 percent, as required by EU rules, by 2029. Financial institutions and rating agencies have repeatedly warned of consequences should France fail to act, some of which are no longer hypothetical. Borrowing costs are rising, with the yield on France’s benchmark 10-year bonds ― a useful indicator of faith in a country’s finances ― drifting away from historically safe Germany’s yields and toward those of Italy, a country long synonymous with reckless spending and unsustainable debt.   Getting the French to tighten their belts has so far proven to be Mission Impossible, but the situation is not yet so dire that it’s time to call in the IMF. Bayrou, however, is betting his political future that history will prove him right.