LONDON — Global Counsel started the year riding high. The public affairs agency had just posted its best-ever financial results, could boast of staff in multiple countries, and was in the process of expanding its international operations. In a matter of weeks, the lobby shop’s 16-year legacy had been all-but wiped out, and it had collapsed into administration under the weight of the Epstein scandal. Co-founder Peter Mandelson, the former U.K. ambassador to Washington and one of the commanding figures of British politics over the past four decades, is facing fresh revelations over his links to convicted sex offender Jeffrey Epstein. Despite frantic efforts to distance itself from Mandelson, the influence business he masterminded was forced to fold. POLITICO spoke to more than half a dozen members of staff and former clients since the agency announced it was going into administration last Thursday. They paint a picture of a dramatic and sudden disintegration which left more than 100 staffers in London, Brussels and Washington scrambling to find new jobs. Many were granted anonymity to speak openly about their experience. NEVER SEEN HIM Staff insist Mandelson — who founded Global Counsel in 2010 after Labour lost power — had very little to do with the firm when the latest documents on his contact with Epstein dropped at the end of January. Among them were emails suggesting Mandelson leaked sensitive information to Epstein when serving as business secretary. He is now subject to a police investigation. Mandelson’s lawyers Mishcon de Reya say he is cooperating with the police investigation, and his overriding priority is to “clear his name.” “There was a feeling of bewilderment initially because it seemed blindingly obvious to us that [Mandelson] was out of the picture,” a senior staff member said. “But the reporting, or maybe more the response from people to the reporting, made it sound like he was still sitting in on pitches and approving our expenses.” The former Labour heavyweight’s association with the firm had long been seen as a major asset — particularly as Labour’s Keir Starmer prepared for power, backed by Mandelson ally Morgan McSweeney. But Mandelson formally stepped back from any day-to-day involvement with Global Counsel when he became U.K. ambassador to Washington in December 2024. When he was sacked from the post by Starmer last September over previous revelations about his links to Epstein, the firm announced his 21 percent stake would be sold. He would be barred from drawing financial benefits, and his shares would be reclassified so he would no longer have a say over business decisions. But the senior staff member quoted above said a failure to complete the divestment process quickly, given the complex legal and financial process involved, meant it was “impossible to argue there was clear blue water” from Mandelson. Mandelson was sacked from the ambassador post by Keir Starmer last September over previous revelations about his links to Epstein. | Rick Friedman/Corbis via Getty Images This was particularly frustrating for staff members who said they had never seen Mandelson in the flesh. Even those with years of service said he had only been present a handful of times. ‘BLOWN OUT OF PROPORTION’ Matters were also complicated by the appearance of Global Counsel co-founder Benjamin Wegg-Prosser — then still the company’s chief executive —in the Epstein emails released by the U.S. Department of Justice. He was copied into conversations about the business between Mandelson and Epstein, and directly emailed Epstein with a draft statement the company had prepared seeking to downplay links between Mandelson and the convicted sex offender. Global Counsel was approached for comment about the Wegg-Prosser emails at the time they were released, but they declined to comment. POLITICO was unable to reach Wegg-Prosser for comment ahead of the publication of this article. Wegg-Prosser’s involvement was simply “one of those circumstances where you’re asked to do something by your chairman and you do that,” a Global Counsel director said. His role, they argued, had been “blown significantly out of proportion” by media reporting. “Anyone that works in public affairs will know that a meeting is a meeting, and you’re never always going to know who that person is.” In an attempt to put a lid on the growing crisis, Wegg-Prosser announced his departure from Global Counsel on Feb. 6, just hours before the firm confirmed it had finally completed the divestment of Mandelson’s shares. But it wasn’t enough. An associate director of the agency said Wegg-Prosser’s exit came as a “real shock” to staff, and argued that his links had been “seriously overblown” by the media. Wegg-Prosser’s “principled” decision to step down, they suggested, may have instead “perversely” fueled an erroneous impression that the links between Epstein and the firm were deeper than the reality. NOT JUST HEADLINES Staff initially hoped the Mandelson backlash would be limited to a series of gruesome headlines. But those hopes were dashed when a host of household names — including Tesco, Bank of America and Barclays — called time on their relationship with the firm. Some major clients did stick by the embattled agency, including banking giant Santander. Samir Dwesar, the bank’s senior public affairs and public policy manager told POLITICO the staff “don’t deserve this,” but predicted the “consummate professionals, who have deep expertise in their areas” would “all be snapped up pretty quickly.” Another public affairs professional at a company which employed Global Counsel said there had been “no discussions” about ending their contract. “Our assessment was that Global Counsel’s leadership had taken the correct decisions under incredibly difficult circumstances,” they said. “We were confident they’d get through it.” Many staff believed the same when they gathered for the all-hands meeting at the firm’s London HQ last Thursday — only to be told that not only was Global Counsel to close, but that administrators had been appointed to oversee the company’s affairs. A note to staff from Chief Executive Rebecca Park said “the decision to wind up the UK business affects all of GC. We will be discussing separately with each country office how the process will work for them.” Staff present for the London HQ announcement soon decamped to local bars to digest the news and drown their sorrows. | Daniel Sorabji/AFP via Getty Images “I think for a lot of people, it was a shock,” the same director at the firm quoted above said. “We’d amazingly retained a significant number of clients. In terms of business, that’s not easy, particularly when you’re politically exposed. So I think there should be a big thanks to them and the loyalty they showed as well.” The associate director quoted above said staff had sought solace in the survival of  business lobby group the Confederation of British Industry, which weathered its own storm of sexual misconduct claims. A mass exodus of members, and the icing of Whitehall meetings by government ministers wary of association with the group, was overcome under new leadership. “Maybe I was naïve, but lots of business leaders and politicians are brought down by scandals that leave their companies or parties bruised, and they still survive,” the associate director quoted above said. “I’d started to believe that might be the case with us too.” Staff present for the London HQ announcement soon decamped to local bars to digest the news and drown their sorrows. Some who had dialed in from half-term holidays had to return to their families knowing they’d just lost their livelihoods. Everyone — from decade-long veterans to new joiners — was affected. There remains a sense of genuine anger and grief among staff, who say their time at Global Counsel was among the most rewarding of their careers. While some had begrudgingly started job-hunting when the scandal first broke, others had opted to stay given a belief that the firm was entirely disconnected from Mandelson’s historic behavior. “I spent the weekend speaking to my partner, my parents, and my closest friends about what to do,” the associate director quoted above said of the days after the scandal broke. “I looked through some of the emails [in the Epstein files] and felt physically nauseous. I didn’t want to have even a microscopic link to what I was reading about, but at the same time I didn’t see that reflected whatsoever in the culture or people at Global Counsel.” The lingering question for many is whether the collapse could have been prevented. The failure to divest Mandelson’s shares left a tangible legal link, but a second associate director said frequent references to Mandelson in Global Counsel media coverage meant people outside the operation saw him as “central to its DNA” — even if that was not the experience of those working there. NEW HORIZONS Park, who stepped up as CEO following Wegg-Prosser’s departure, was praised by some of the staff for how she handled the final days of the crisis. Staff POLITICO spoke to highlighted efforts she had overseen to try and secure new jobs for those out of work. There is even more urgency to find a new job for those staff whose visas are linked to their work at the firm. Under U.K. laws they will have just 60 days to find new employment or face having their visas revoked. It has left some Global Counsel staff at risk of losing their immigration status, along with family members listed as their dependents. One staff member left in that situation said the change to their visa status meant they are no longer entitled to unemployment benefits or other public funds. With the firm entering into the administration process, other staff also lost access to enhanced parental pay packages. Despite initial fears that staff at the agency would be stained by their association, several of those who spoke to POLITICO have already secured new jobs. One staff member at rival firm FGS Global said it the lobbying agency is planning a hiring spree, with as many as two dozen ex-Global Counsel staff being lined up for new gigs. Those are expected to include a raft of senior staffers who’d been working on financial services and private equity briefs. “I think people do recognize that this is an insane opportunity from a talent perspective, just given how [Global Counsel] was respected and the people that were there, I think they genuinely are recognized as top of the class in the field,” the ex-Global Counsel director quoted above said. This reporting first appeared in POLITICO London Influence, a weekly newsletter on lobbying, campaigning and influence in Westminster and beyond.

BERLIN — Chancellor Friedrich Merz has picked a risky political fight with Germany’s workforce of some 46 million people. His message, in short: Don’t be so lazy. Germans don’t work enough hours and take too many sick days, hampering economic growth, Merz has argued in recent weeks. It’s not the most expedient political message in a pivotal year of regional elections, even in a country whose traditional self-image extols diligence and hard work as moral imperatives. Merz’s plea for people to work harder comes as he struggles to revive Germany’s long-stagnant economy and pushes market-oriented policies to boost competitiveness — partly by addressing skilled labor shortages — at home and across the EU. But it also comes at a politically sensitive moment ahead of a series of state elections that are seen as key tests of the national mood, with his own conservative party struggling to ward off a rising far right. This has not stopped the chancellor from taking an almost chastising tone with Germans for not working more and for not working harder. “The overall productivity of our national economy is not high enough,” Merz said during a recent speech to industry groups in eastern Germany, flagging part-time work as a problem. “To put it even more bluntly: Work-life balance and a four-day week will not be enough to maintain our country’s current level of prosperity in the future, which is why we need to work harder.” During a recent campaign stop in the southwestern state of Baden-Württemberg, where conservatives are clinging to a single-digit lead in polls ahead of a March 8 election, Merz doubled down, decrying the number of sick days working Germans take on average — nearly three weeks per year, he said, well above the EU average. “Is that really right? Is that really necessary?” Merz said with a clenched fist. “Can we talk about how we can create better incentives to encourage people to work rather than taking sick leave when they are ill?” He added, “In this Federal Republic of Germany, we must achieve a higher economic performance together than we are currently achieving.” ‘PART-TIME LIFESTYLE’ Germans rank near the bottom of the EU — third to last — in terms of average weekly hours worked, according to recent figures compiled by the country’s statistics agency. A big part of the reason is that the share of German workers choosing part-time employment is at a record high. Merz’s conservatives recently proposed a measure to boost overall work hours by ending the “legal entitlement” to part-time work unless an employee has a special reason, such as childcare obligations or continuing education. The proposal — titled “No legal right to a part-time lifestyle”— angered many Germans for what they perceived as its admonishing tenor. Many German women, who work part-time far more frequently than men, felt particularly targeted. Merz’s conservatives recently proposed a measure to boost overall work hours by ending the “legal entitlement” to part-time work unless an employee has a special reason, such as childcare obligations or continuing education. | Markus Scholz/picture alliance via Getty Images “This is not a lifestyle choice I have made,” said one woman who identified herself as a part-time worker from Rhineland-Palatinate — a western German state that will hold an election March 22 — in an interview for German public television, explaining that she provides care for her son and mother. Merz’s statements on part-time work and sick days were also roundly mocked on social media, with Germans turning the phrase “part-time lifestyle” into a variety of widely shared memes. “I can still work!” said the voiceover in one online video post depicting a scene from the 1975 comedy film “Monty Python and the Holy Grail,” in which a knight who has just lost his limbs in battle declares he still wants to fight — or in this case, work. “Go ahead, send me an email!” the voiceover continues. “Give me something to print!” The political damage to Merz and his conservatives appears substantial. Two-thirds of Germans oppose the proposal of his Christian Democratic Union (CDU) to make it harder to work part-time, according to Germany’s benchmark ARD-DeutschlandTrend survey. More consequentially for Merz, his conservatives are losing points on their core issue: the economy. Only 31 percent of Germans surveyed said they trust the chancellor’s conservatives to improve the economy. That still beats other parties, but is 6 percentage points less than last year — tying the conservatives’ lowest economy rating on record. So it came as no surprise, earlier this month, when Merz’s party struck the phrase “part-time lifestyle” from the proposal on increasing work hours to be considered at a CDU party conference in late February. GREECE AS A MODEL? Topping the list of the most hours worked in the EU is Greece, a country whose people many German conservatives scorned as lazy during the European debt crisis over a decade ago. Merz now holds up Greece as something of a model, although Germany’s labor productivity remains far higher. Germans rank near the bottom of the EU — third last — in terms of average weekly hours worked, according to recent figures compiled by the country’s statistics agency. | Katrin Luxenburger/picture alliance via Getty Images During a visit by conservative Greek Prime Minister Kyriakos Mitsotakis to Berlin last year, Merz praised Athens for deregulating its labor market, enabling a six-day workweek. “I recommend that everyone in Germany who thinks it is terrible and unreasonable to work 40 hours a week … take a look at Greece,” Merz said alongside Mitsotakis. “We can certainly learn something from Greece in this regard.” But given fierce German resistance to such proposals — and the fact Merz governs in coalition with the center-left Social Democratic Party (SPD), which is protective of current labor-market regulations — the chancellor has few immediate remedies for Germany’s chronic skilled labor shortage and stagnating productivity.  In fact, Merz’s more immediate problem may not be a work-avoiding electorate but rather the growing dearth of jobs in the industrial sector that long propelled the country’s export-oriented economy. Germany’s unemployment rate recently surpassed the 3 million mark to hit a 12-year high. “We’ve already decided on many measures to help the economy,” Merz said on a post on X after the figures emerged. “But it is not enough.” Nette Nöstlinger contributed to this report.

LONDON — Victory is finally in sight for the Bank of England. But rate cuts aren’t. It’s taken Britain’s central bank longer to bring inflation under control than any of its peers on the global stage, but on Thursday economists expect forecasts to show that inflation in the U.K. will return to the government’s 2 percent target within the next two years, having overshot it for almost all of the last four. The pound surged to its highest level against the dollar in five years last month, as global confidence in the anchor of the world’s financial system appeared to fray due to the news flow out of the U.S. But there will be little else to set the pulse racing: Financial market participants are almost unanimous in expecting no change in the Bank rate from its current 3.75 percent. Even the extraordinary events of January, which saw the U.S. seize Venezuelan leader Nicolas Maduro and U.S. President Donald Trump threaten military force against his NATO allies over Greenland, seem unlikely to induce a shift in the Bank’s communication about the U.K.’s economic outlook. Extrapolating how these seismic events will translate into the U.K. economy has been hard. One of the more hawkish members of the Bank’s Monetary Policy Committee, Megan Greene, argued in a speech last month that while a stronger pound should help keep the cost of imports down, it could easily be offset by other factors, especially if the U.S. Federal Reserve were to be pressured by the White House into cutting U.S. interest rates more aggressively. Greene argued the MPC should focus on what is in its power to control. Here, the Bank is facing a familiar conundrum: growth is sluggish and unemployment is trending higher, but inflation is coming down — even if painfully slowly — and most business surveys suggest wage growth will continue to outstrip what is justified by productivity. Headline inflation ticked up again in December to 3.4 percent, still far above the 2 percent target. The latest data suggest that the economy is still more or less ticking along, growing at an annual rate of 1.4 percent in the three months through November. STILL ‘GRADUAL AND CAUTIOUS’ The narrow vote by the MPC to cut the Bank rate to 3.75 percent from 4 percent at its last meeting in December — and the unwavering message from the Bank that it will take a “gradual and cautious” approach to easing policy — means the committee will stay put on Thursday, according to Deutsche Bank economist Sanjay Raja. UBS economist Anna Titareva, meanwhile, reckons the vote will be split, with both Governor Andrew Bailey and Deputy Governor Sarah Breeden capable of voting again for a cut alongside Alan Taylor and Swati Dhingra, the two external members most concerned about the risks of a slowdown and an accompanying rise in joblessness. But that scenario would still leave Bailey in the minority against the remaining five of nine members in the committee. Most analysts still expect the Bank to cut interest rates twice this year. Inflation is set to fall from April as Chancellor Rachel Reeves’ decision to strip green levies off energy bills causes a drop in final prices for electricity. Deutsche’s Raja expects cuts in March and again in June, but says rates are unlikely to fall any further after that.

German industrial giant Bosch on Friday confirmed plans to cut 20,000 jobs after profits nearly halved last year, underlining the mounting strain on Germany’s once-dominant manufacturing sector and increasing the pressure on politicians in Berlin to find a solution. Official data released Friday also showed Germany’s unemployment rate, unadjusted for seasonal factors, rising to 6.6 percent — the highest level in twelve years. The number of unemployed people surpassed three million in January. “Economic reality is also reflected in our results,” Bosch CEO Stefan Hartung said, describing 2025 as “a difficult and, in some cases, painful year” for the company, which is a leading supplier of parts for cars. The move lands amid a deepening slump in the country’s automotive industry, long the backbone of German manufacturing. The sector has been shedding jobs rapidly: A 2025 study by EY found that more than 50,000 automotive positions were cut in Germany last year alone. Germany’s automotive downturn has become a wider political test for the government in Berlin and Europe more widely. Once the economy’s crown jewel, the industry is now being challenged by current policy on electric vehicles, energy costs and aggressive competition from Chinese manufacturers. As suppliers weaken, the risk is shifting from lower profits to a lasting loss of competitiveness. With layoffs rising and investment decisions being delayed, Chancellor Friedrich Merz’s government is coming under growing pressure from workers, unions and industry leaders to rethink Germany’s industrial strategy — as doubts spread domestically and across Europe about the country’s ability to remain an economic powerhouse.

Europe isn’t doomed to inexorable decline — and in fact is doing better than most people realize, said the IMF’s Kristalina Georgieva. Much of the European Union’s policymaking bubble has been gripped with despair since the bloc’s weakness was exposed during a recent confrontation with the U.S. over Greenland. While U.S. President Donald Trump eventually backed down, the European military response — sending a symbolic handful of soldiers to the North Atlantic island — underlined that had the White House really wanted to seize Greenland, Europeans would have had no choice but to accede. But in an interview with POLITICO, Georgieva, managing director of the International Monetary Fund, said the pessimism was misplaced. In an end-of-year shortlist of top-performing economies put together by the Economist, she noted, the top 10 included seven EU countries, with Portugal in the top spot. The Iberian economy has recorded steady growth while comfortably paying down its debt in the past few years. That’s a fact, she said, that should be celebrated. “Europeans — we are modest people. We don’t brag,” the IMF head stated. She recalled how a U.S. colleague had recently done “something marginal.” “He said ‘oh, let’s look at this. I’m great. I’m fantastic,’” Georgieva recounted. “In Europe you do something great and you say ‘not too bad.’ In this world we are in now, you have to brag a little, exude confidence.” Even before the Greenland standoff, a sense of despair had settled over the top echelons of European economic decision-making. Mario Draghi, former head of the European Central Bank, warned that the bloc faced “slow agony” if it didn’t reform. Georgieva acknowledged the increasingly sharp-elbowed way in which countries now operate — one that leaves little room for multilateral organizations like her own IMF. In a speech earlier on Monday she acknowledged that the world had become “multipolar” — code for a new era of jostling geopolitical blocs that has replaced unilateral American dominance. Speaking to POLITICO, Georgieva said that “geopolitical factors play an increasingly bigger role in defining the world economy.” On Greenland, she said the fact that “allies find it more difficult to retain their sense of common purpose” was a “significant change.” But she insisted that the “destiny of Europe is in the hands of Europeans.” The IMF’s list of advice to reform the EU’s economy echoes Draghi’s own, contained in his competitiveness report from 2024: They include strengthening the single market, cutting regulations on businesses, and integrating the continent’s fragmented energy and financial systems. Mario Draghi, former head of the European Central Bank, warned that the bloc faced “slow agony” if it didn’t reform. | Olivier Matthys/EPA Georgieva said it was “paramount” for the EU to press ahead with reform. “Get your own house in order,” she said. Three of the Economist shortlist’s best-performing countries — Ireland, Portugal and Greece — were put under IMF supervision at the height of the eurozone crisis. There, they had to agree to painful adjustments known as structural reform programs, which included tax hikes and brutal cuts to public services. In the case of Greece in particular, those structural reforms resulted in a sharp increase in unemployment and poverty levels; gross domestic product per capita is still not at its pre-crisis level. But, said Georgieva, their current success is proof that countries, and the EU as a whole, can change their economic trajectories. Asked whether Europe should consider retaliating against U.S. aggression by selling off assets like government bonds, a suggestion included in a recent analyst report from Deutsche Bank, the senior official urged caution. “I would say that the smooth functioning of the international monetary system is of value to all countries,” she said. “Disturbing that smooth functioning of the international monetary system with the same token can bring negative impact.” The Bulgarian boss of the Washington, D.C.-based fund did, however, back a deeper pool of joint EU debt — an idea favored by Draghi but regarded with suspicion by frugal countries like Germany and the Netherlands. As for the disbursement of $8.1 billion in IMF funds to Ukraine to help the country meet its financing needs, Georgieva said she was aiming to hold an IMF board meeting in the second half of `February at which the board could approve the program and start paying out funds. Though the amount is relatively small — less than a tenth of the €90 billion that the EU has agreed to lend to Ukraine — IMF approval is a signal of confidence for financial markets. The IMF chief also said that a meeting “is scheduled” with U.S. Treasury Secretary Scott Bessent regarding the situation in Venezuela, and that it would happen in the “nearest future.” The IMF stopped working with Venezuela in 2019. The fund estimates that the South American country’s economy, battered by U.S. sanctions and plagued by mismanagement, has shrunk to a third of its previous largest size. Since the U.S. captured Venezuelan President Nicolás Maduro at the start of the year, it has floated the possibility of allowing Venezuela to access IMF financing again.

Prime minister’s questions: a shouty, jeery, very occasionally useful advert for British politics. Here’s what you need to know from the latest session in POLITICO’s weekly run-through. What they sparred about: The year that was. Prime Minister Keir Starmer and Tory Leader Kemi Badenoch’s last hurrah of 2025 saw everyone’s favorite duo row about the turkey Labour’s record over the last 12 months — and who caused the nightmare before Christmas. Pull the other one: Badenoch wished everyone a festive break in the season of goodwill — but then the gloves came off. She raised the PM’s own frustration at pulling levers but struggling to get change (Labour’s favorite word). “Does he blame himself or the levers?” Cutting. Starmer used the free airtime to rattle through his achievements, stressing “I’ve got a whole list … I could go on for a very long time.” Comparisons to Santa write themselves. Jobbing off:  “The Prime Minister promised economic growth, but the only thing that’s grown is his list of broken promises,” Badenoch hit back. This list analogy was really gaining momentum. She lambasted rising unemployment under Labour, yet the PM was able to point to lower inactivity under his watch and, of course, mentioned the boost of falling inflation this morning. Backhanded compliment: Starmer, no doubt desperate for a rest, used the imminent break to “congratulate” Badenoch for breaking a record on the number of Tories defecting to Reform UK. “The question is who’s next,” he mused, enjoying the chance to focus on the Conservatives’ threat to their right, rather than Labour’s troubles to its left. Clucking their tongues: Outraged at her Shadow Cabinet getting called non-entities, Badenoch kept the seasonal attacks going by labeling the Cabinet a “bunch of turkeys.” She said Starmer was no longer a caretaker PM but the “undertaker prime minister.” Bruising stuff. Last orders: Amid all the metaphorical tinsel and bells of holly, Starmer adopted a lawyerly tone on Labour’s support for pubs (even though many greasy spoons have banned Labour MPs) and condemned ongoing industrial action by resident doctors. But the Tory leader went out on (possibly) a new low by arguing Starmer “doesn’t have the baubles” to ban medical staff from striking and said all Labour MPs want “is a new leader.” Grab the mince pies: The prime minister’s speechwriters clearly did their homework with Starmer, not a natural on the humor front, comparing the Tories to “The Muppets Christmas Carol” and joking that all the defections meant Badenoch would be “left Home Alone.” Penalty shootout: Hold the homepage — PMQs actually delivered a news line. The PM confirmed the government issued a licence to transfer to Ukraine £2.5 billion of Russian billionaire Roman Abramovich’s cash from his sale of Chelsea football club. Starmer told Abramovich to “pay up now,” or he’d be taken to court. Teal bauble: The end-of-year vibes allowed Starmer to deploy a festive jibe of advice to Reform UK: “If mysterious men from the East appear bearing gifts, this time, report it to the police!” Labour just won’t let ex-Reform UK Leader in Wales Nathan Gill’s conviction for pro-Russian bribery go. Even Nigel Farage, sat up above in the VIP public gallery, had a chuckle, admitting “that’s quite funny” to nearby hacks. Helpful backbench intervention of the week: Tipton and Wednesbury MP Antonia Bance commended the government’s efforts to support the West Midlands by striking the U.S. trade deal, ripping into Reform. The PM just couldn’t resist another attack line against his party’s main opponent. Totally unscientific scores on the doors: Starmer 8/10. Badenoch 5/10. The final PMQs exchange was never going to be a serious exchange, given the opportunity to make Christmas gags. The Tory leader followed a scattergun approach, highlighting the various broken promises, but none landed a blow. The PM, doubtless relieved to bag a few weeks away from the interrogation, brushed them off and used his pre-scripted lines to deliver a solid concluding performance.

The Bank of England is set to cut interest rates on Thursday, after lower-than-expected inflation figures and signs of a weakening jobs market. Headline inflation slowed to 3.2 percent in November, from 3.6 in October, the Office for National Statistics said on Wednesday. That was the lowest since March and a much clearer drop than predicted by analysts, who had forecast a rate of 3.5 percent. “A cut tomorrow should be a no-brainer, with another to follow in February,” Peel Hunt chief economist Kallum Pickering said via social media, pointing to “No growth since summer, a labor market that is rapidly cooling, and a big downside surprise to inflation across the board in November.” The news comes only a day after labor market data from the ONS showed the unemployment rate rising to its highest level in over four years in October. The economy has struggled for growth in the second half of this year, after a sugar rush in the first quarter in which exporters rushed to get their goods to the U.S. before President Donald Trump could impose trade tariffs. The hangover from that — and the lingering uncertainty over the global economic outlook caused by Trump’s trade policy — has been severe. But at the same time, an unwelcome rise in inflation has stopped the Bank of England from cutting interest rates more quickly to support the economy. A raft of hikes in government- controlled prices such as energy bills and rail fares meant that inflation was rising for much of the year, leading it to peak at 3.8 percent in September. That was also partly due to companies passing on increases in labor costs due to a 6.7 percent hike in the National Living Wage and an increase in employers’ National Insurance contributions. Panmure Liberum chief economist Simon French said the wide range of goods and services now showing softening price trends showed that demand is now so weak that companies are having to absorb those price increases themselves instead. The government will be particularly relieved to have seen politically sensitive food prices, which have been a constant bugbear for the last couple of years, making the biggest contribution to the slowdown in inflation in November. Prices for clothing and footwear and for discretionary services such as restaurants and hotels also fell slightly. “As Christmas gifts go, this is a most welcome one,” said Danni Hewson, head of financial analysis at AJ Bell. “It’s the time of year when people put a few more things in their supermarket trolley, so news that food and alcohol inflation has fallen will be a boon for cash-strapped families.” The Bank has consistently said that inflation would fall once those factors passed out of the annual calculations, given that the underlying weakness of the economy. However, with the worst bout of inflation in half a century still fresh in everyone’s minds, it has been forced to keep the pace of policy easing “gradual and cautious”. Peel Hunt’s Pickering said that the scale of the slowdown could be enough to have some members of the Monetary Policy Committee voting for a half-point cut in the Bank Rate to 3.5 percent on Thursday. However, the consensus remains for a quarter-point cut to 3.75 percent. The pound still fell over half a cent against the dollar in response to the numbers, as traders penciled in more scope for easing next year, while the government’s borrowing costs in the bond market also fell.

BERLIN — German Chancellor Friedrich Merz urged Ukrainian President Volodymyr Zelenskyy to curb the flow of young Ukrainian men to Germany and ensure they stay to defend their country. “In a lengthy telephone conversation today, I asked the Ukrainian president to ensure that young men in particular from Ukraine do not come to Germany in large numbers — in increasing numbers — but that they serve their country,” Merz said Thursday. “They are needed there.” His comments come amid growing concerns in Germany — particularly within Merz’s conservative ranks — that public support for the Ukrainian cause could wane if young male Ukrainians are seen to be avoiding military service by coming to Germany. Following the relaxation of Ukrainian exit rules over the summer, the number of young Ukrainian men aged 18 to 22 entering Germany rose from 19 per week in mid-August to between 1,400 and 1,800 per week in October, according to German media reports citing the German interior ministry.   Markus Söder, Bavaria’s conservative premier and an ally of Merz, proposed restrictions on the EU’s so-called Temporary Protection Directive if Kyiv doesn’t voluntarily reduce arrivals. The rules provide Ukrainians with an automatic protected status.       Germany is one of Ukraine’s staunchest allies within the EU. The country has hosted over 1.2 million Ukrainian refugees since Russia’s full-scale invasion in 2022 and is its biggest donor in military aid after the U.S. in absolute numbers. Members of Merz’s ruling coalition fear that the growing presence of young Ukrainian men in Germany will be turned into a political flash point by members of the far-right Alternative for Germany (AfD) party, who criticize the government’s ongoing support for Kyiv. The ascending AfD, now polling first, has long demanded a stop to welfare payments to Ukrainians. Around 490,000 Ukrainian citizens of working age receive long-term unemployment benefits in Germany, according to data from the country’s employment agency. Merz’s coalition — which is under increasing fiscal pressure and generally wants to reduce welfare spending — is working on a draft law that would cut the right to such benefits for Ukrainians and encourage work. “In Germany, the transfer payments for these refugees will be such that the incentives to work are greater than the incentives in the transfer system,” Merz said Thursday. In the same phone conversation, Merz also urged Zelenskyy to sort out the country’s corruption problems as Kyiv faces the fallout of a massive scandal involving kickbacks — another development that German officials fear could undermine public support for the embattled country.

PARIS — Emmanuel Macron was on a plane to Egypt when France faced the most serious crisis of his time in office. So why did the French president leave the country early Monday morning while there was such uncertainty at home? The answer, according to several current and former French officials, was to ensure his legacy. With fewer than 20 months left in the Elysée Palace, Macron is laser-focused on cementing his place in the history books — and believes he’s earned that distinction for his work in the Middle East, they said. The French president wasn’t going to miss his chance to be there for Monday’s peace summit in the Egyptian resort of Sharm el-Sheik, even with his house on fire and irrespective of it forcing his twice hand-picked prime minister, Sébastien Lecornu, to push back presenting his draft budget by a day, nearly missing the deadline. French officials in recent days have been working hard to craft a narrative that the Gaza peace plan pushed by U.S. President Donald Trump was triggered by Macron’s own proposal and his lead role in pushing for recognition of Palestinian statehood at the United Nations General Assembly last month.  That’s why Macron really wanted to make it to the summit in Egypt, said a government adviser who, like others quoted in this piece, was granted anonymity to speak candidly. An ally of Lecornu said the president was “very, very focused” on Gaza.  The French political system is designed so that the president can represent the country on the world stage while the prime minister looks after matters at home. But these are exceptional circumstances in France, with Lecornu resigning after just 14 hours before being reappointed and some politicians even speculating that Macron might not even see out his time in office. At first sight, Macron appears to be following in the footsteps of former presidents, such as François Mitterrand and Jacques Chirac, who pivoted to the international stage in the later years of their terms after losing their parliamentary majorities.   But Macron hasn’t let go of domestic policy. Unlike his predecessors, he isn’t adopting a “hands-off attitude,” said an early Macron backer.      “Macron has become very attentive to his European and international visibility,” said a former French official. “It’s what he’s got left to give himself the impression that he still has influence.” At first sight, Macron appears to be following in the footsteps of former presidents. | Joel Saget/AFP via Getty Images CHARM IN SHARM The Elysée last week went into lobbying mode, ramping up briefings with academics and journalists to drive home that Macron had been key to the success of Trump’s peace plan. “The Elysée’s priority was to spread the idea that their plan was very useful,” said a former diplomat, referencing the Franco-Saudi roadmap to end the war in Gaza. At the U.N. General Assembly last month, Macron risked drawing U.S. and Israeli ire with his push for Palestinian statehood, which was followed by close to a dozen Western states doing the same. His speech on the U.N. stage drew comparisons in Paris with other occasions when France stood up to Washington, in particular former Prime Minister Dominique de Villepin’s landmark 2003 address rejecting Washington’s march to war in Iraq. While in Egypt, Macron played carefully with the optics of power, of which he is an astute reader, to avoid being seen as playing second fiddle to Trump. He chose not to stand on the podium behind the U.S. president, instead sitting with Turkish President Recep Tayyip Erdoğan and Middle Eastern leaders, a move that was noted by Trump. Talking to reporters on the sidelines of the summit, Macron spoke about the efforts needed to keep the ceasefire in Gaza alive and the contribution France could make. Asked about national politics, he presented himself as “the guarantor of French institutions,” but could not help but lash out at opposition parties for trying to destabilize his prime minister. WINNING THE BATTLE, LOSING THE WAR Many officials say the French president is trying to remain above the fray. But there are several explanations as to why he’s doing so that go beyond the legacy argument. Some attribute it to the Jupiterian strategy of shrouding his office in mystique, communicating in grand gestures, and refusing to sully himself with the mudslinging of domestic politics.  One government official said Macron is “probably letting tensions dial down” and he is remaining silent to protect the institutional checks and balances of the French state.  Macron has cycled through centrist and center-right prime ministers in the past year. | Chip Somodevilla/Getty Images Others say the silence is strategic, even magnanimous. They say the president recognizes just how unpopular he is — a recent poll put his approval rating at 14 percent — and is trying to prevent his allies from being tarnished by his political toxicity.  But Macron never really lets go of anything. In his meeting with opposition parties last week, Macron made it very clear who calls the shots when, according to a presidential aide, he offered to partially delay his flagship pension law, which pushed back the age of retirement to 64 from 62 for most workers.  Macron has cycled through centrist and center-right prime ministers in the past year to fend off challenges to that law and other achievements such as his tax cuts. Many saw his decision to reappoint the loyal Lecornu, just days after he resigned in the aftermath of his 14-hour government, as the sharpest example of his dogged refusal to hand over power despite his camp losing last summer’s snap election.   Macron ended up being forced to sell off the crown jewel he had jealously been guarding, the pensions reform, at least for now. Lecornu announced Tuesday that he would freeze the law raising the retirement age until 2027, in order to secure support from the Socialist Party and survive a no-confidence vote on Thursday.  Macron might yet save his pensions reform as there are doubts swirling that the suspension might not pass through parliament.  But fighting tooth and nail to ensure his legacy might also destroy it if Macron can’t secure the future of his centrist movement and his potential successors, such as former prime ministers and likely presidential candidates Edouard Philippe and Gabriel Attal.   Macron’s handling of the current crisis will almost certainly affect the campaign of any centrist trying to stop Marine Le Pen, or someone else from the far-right National Rally, from winning the presidency.  “What image are we projecting? We’re in favor of pension reform, and then we give up. It’s not clear,” said the Lecornu ally quoted above. “The only one who appears to know what she represents is Marine Le Pen,” they said. “She has a populist message, but it’s simple and consistent: This circus must stop.” Pauline de Saint Remy and Giorgio Leali contributed reporting.

Factory workers, cashiers and hotel staff in Greece could soon be working longer shifts, with the country set to become the first EU member to officially introduce a 13-hour workday for the private sector. Parliament is set to vote on the controversial legislation on Wednesday, amid planned nationwide protest rallies. Despite growing pushback from unions and opposition parties, the bill is expected to pass comfortably with the votes of the ruling New Democracy party. Since taking power in 2019, the center-left government has transformed the country’s labor market into what it hails as one of the most “flexible” in Europe. Starting in July 2024, employees in industry, retail, agriculture and some service sectors can be asked to work a new six-day schedule, with an extra 40 percent paid on top of their regular wage for the sixth working day. The move, a shift against a trend toward shorter working weeks in some European countries, was deemed necessary due to Greece’s aging and shrinking population and a major shortage of skilled workers. Greece was gripped by a general strike on Tuesday, the second this month, as unions demanded the withdrawal of the new legislation. Most public transport and public services were brought to a standstill amid mass protests. “Flexible working hours” in practice means “the abolition of the eight-hour workday, the destruction of every concept of family and social life and the legalization of overexploitation,” the public sector union, ADEDY, said in a statement. The new legislation stipulates that employees can work up to 13 hours per day on no more than 37.5 days per year, with a maximum limit of 48 hours per week, based on a four-month average and maximum overtime of 150 hours. But the 40-hour workweek continues to be the rule, and overtime in general is to be better compensated, with a 40 percent bonus. The 13-hour workday should be voluntary with no employee obliged to work overtime, the Labor Ministry has said. But unions have argued that employers have the upper hand in this negotiation, particularly in a country with almost no tradition of workplace inspections. The legislation would also introduce an option for annual leave to be fragmented into more than two parts throughout the year, flexible weekly schedules, two-day contracts and fast-track hiring via an app, all in order to fulfill “urgent company needs,” the draft legislation says. Greece’s economy has rebounded since its decade-long financial crisis, which started with the 2009 debt crisis and was followed by three bailout programs that lasted until 2018. The unemployment rate, which during the crisis reached a staggering 28 percent, was at 8.1 percent in August, the latest month for which figures available. The EU average stood at 5.9 percent. However, there has been no convergence with the EU on the rest of the data: Salaries remain among the lowest in the bloc, which means many Greeks are forced to work two jobs to cover the soaring cost of living, in particular high housing costs. The country is second to last in the EU when it comes to purchasing power, with nearly half of households unable to afford basic necessities, according to a 2024 report by the European Committee of Social Rights. One in five Greeks works more than 45 hours a week, the highest rate in the European Union, according to Eurostat data published earlier this month. According to OECD data, Greece ranked fifth worldwide in terms of annual working hours in 2023, behind only Colombia, Mexico, Costa Rica and Chile. NEW LABOR RULES WILL GIVE ‘BOOST TO THE PRIVATE SECTOR’ Labor Minister Niki Kerameus of the New Democracy Party strongly supports the new legislation, arguing that it “gives a boost to the private sector” and “strengthens the employees.”  “The expression ’13-hour workday’ implies that we will all work 13 hours every day, all year round. Is this true? Can it happen every day? No, is the answer. It can happen up to 37 days a year, or three days a month. Secondly, it requires the employee’s agreement,” she told Skai TV in an interview on Tuesday. Kerameus has repeatedly stressed that an employee cannot be laid off for refusing to accept the new rules, added that with unemployment levels at a “17-year low […], you can understand how much this strengthens the position of the employee.” But opponents of the new law, including Dimitrios Mantzos, a lawmaker with the main opposition socialist Pasok party, called out the government in parliament on Tuesday for deregulating labor relations, heightening job insecurity and disrupting work-life balance. “The mere fact that we are here discussing such a bill is unacceptable, it is shameful, it is backward,” said Efi Achtsioglou, an MP with the New Left party. “It is unthinkable that in 2025 we are still debating whether to legislate a 13-hour work day.” Labor market experts have said the move would legalize labor rights violations that have been committed by employers in terms of overtime work and will lead to burnout and increased accidents. The legislation has been repeatedly condemned by employee representatives. “These regulations exacerbate job insecurity and reinforce the model of flexible and unprotected work,” Greece’s main private sector union, the Greek General Confederation of Labour, said in a letter to Kerameus in late September.