Competitiveness Check—October 20 Edition
The Quick Take
The International Monetary Fund (IMF) and World Bank annual meetings were held amid intensifying global economic challenges. Global growth is projected to slow from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026. Fiscal deficits are rising and the IMF is flagging risks in private equity and cryptocurrency markets.
US-China trade tensions escalated sharply after Beijing tightened export controls on rare earth minerals, prompting Washington to announce a 100% tariff on all Chinese imports starting November 1 (raising effective duties to 130%). Read our insights on the spat here.
Political instability has cost France at least 0.2 percentage points of growth, according to its central bank. With economic stagnation in Germany and budget tensions in the United Kingdom, Europe’s largest economies are in flux.
Russian drone incursions into Denmark overshadowed the European Political Community meeting in Copenhagen on October 2. EU leaders will meet again at the EU summit on October 23 to decide how to use sanctioned Russian assets for Ukraine—a key sticking point.
Meanwhile, EU trade ministers convened in Denmark on October 13. The meeting took place amid renewed pressure from the US administration over the EU’s green and digital rulebooks. Read our recent analysis of the EU’s digital legislation here.
Top Five Transatlantic Trade-Related Developments
October 1: Top executives from 28 of Europe’s largest companies signed a joint declaration with concrete proposals for boosting Europe’s competitiveness. In the declaration, the companies stated that they will increase their investments by 2030 if EU leaders pursue reforms that simplify rules and reporting, among other actions.
October 3: The United Kingdom and Greenland agreed to resume trade negotiations. The announcement came the day after European leaders gathered in Copenhagen for the European Political Community Summit. Alongside talks over reducing tariffs on seafood imports, the UK government aims to strengthen cooperation on critical minerals.
October 6: The European Commission presented a proposal to protect the EU steel sector from unfair impacts of global overcapacity. After reaching a new quota of 18.3 million tons in imports, additional imports will face a 50% tariff—double the current 25% rate. The next day, the European Commission launched two strategies to accelerate AI uptake in European industry and science.
October 14: US President Donald Trump threatened to impose trade penalties, including tariffs, on Spain over the country’s refusal to raise defense spending to 5% of GDP. Spain is the only NATO member not to have committed to this new target.
October 15: US regulators gave preliminary approval for a new bank, Erebor, which is backed by leading technology figures with ties to Trump. The bank aims to serve businesses that are part of the US “innovation economy”, including cryptocurrency companies and technology start-ups.
The same day, the European Commission launched its new climate and energy strategy for securing Europe's place in global markets.
Figure of the Fortnight
383: The number of policy recommendations laid out by former European Central Bank President and Italian Prime Minister Mario Draghi to make the European economy more competitive. So far, only 11% of Draghi’s proposals have been implemented, according to the European Policy Innovation Council.
Quote Unquote
“When you are facing a non-market economy like China, then you have to exercise industrial policy.… We’re not going to come in and take stakes in nonstrategic industries, but we’ve identified seven industries.”
US Treasury Secretary Scott Bessent in an October 15 interview with CNBC.
“We remain committed to a rules-based trade system and our global network of free trade agreements—including with key steel-producing countries—but we must also act decisively to defend Europe's interests.”
EU Trade Commissioner Maroš Šefčovič announcing on October 7 the Commission’s proposal to protect EU steel from the impacts of global overcapacity.