EU Insight 7 February 2025

Brussels, 7 February 2025

EU LEADERS DISCUSS STREGTHENING EUROPEAN DEFENCE CAPABILITIES
This week’s informal leaders’ retreat marked the first meeting of EU heads of state exclusively focused on defence. The gathering comes as the EU explores avenues to take greater responsibility for its own security, in a geopolitical context where uncertainty reigns supreme since Trump’s inauguration. The discussions centred on three critical areas: defence capabilities, strategic alliances and defence financing. Notably on the latter, as Member States explore options to mobilise funding and investments towards defence, Commission President Ursula von der Leyen floated the idea of tweaking the EU’s fiscal rules to facilitate defence spending. Essentially von der Leyen suggests activating an emergency clause under the Stability and Growth Pact to enable further spending, without violating EU budget rules, which some Member States see as inhibiting necessary investments.

COMMISSION PRESENTS STRATEGY TO FOSTER SAFE AND SUSTAINABLE E-COMMERCE
The Commission unveiled a sweeping strategy aiming to promote safe and sustainable e-commerce. The wide-ranging strategy, which comes as the Commission attempts to crack down on practices by ultra-cheap e-commerce platforms like Shein and Temu, attempts to strike a balance between fair competition, sustainability, and consumer safety in e-commerce. The plan includes targeted changes to custom control and environmental protection, as well as notably a new possible handling fee for low-value goods directly shipped to consumers. Under its new strategy, the Commission is also calling for tougher enforcement of product compliance and consumer protection laws through closer coordination among customs and market surveillance authorities. A follow-up assessment to the strategy and its implementation is to be conducted in early 2026.

NEW RIGHT-WING BELGIAN GOVERNMENT TAKES OFFICE AFTER MONTHS OF NEGOTIATIONS
After seven months of arduous negotiations, a coalition government was finally formed in Belgium, leading to the appointment of the leader of the nationalist New Flemish Alliance Bart De Wever as Prime Minister. The new, so-called Arizona coalition, is composed of five parties from across the political spectrum, ranging from hard-right to centre-left, and the country’s language divide with 3 Flemish and 2 Francophone parties joining the coalition. A core element of the negotiations was the country’s budget, on which the coalition parties agreed amongst others to cut public spending, reform pensions as well as introduce a new capital gains tax. Another key element of the new government’s political direction is the likely reversal of Belgium’s nuclear phase-out.

FRENCH GOVERNMENT SURVIVES NO-CONFIDENCE VOTES AND FINALLY ADOPTS BUDGET
The French Prime Minister François Bayrou survived several no-confidence votes against his government this week. The no-confidence votes were triggered by Bayrou’s decision to pass two budget laws through the Constitution’s controversial Article 49.3, which allows to approve measures without a parliamentary vote. This provision however simultaneously allows the opposition to present a no-confidence motion on the government, as it happened twice during this week. Notably, the no-confidence motions, tabled by far-left La France Insoumise (LFI), were not supported by the centre-left Socialists nor the far-right Rassemblement National (RN), both of whom had supported the toppling of Barnier’s government in December.

NEW TRADE AGREEMENT BETWEEN EU AND CHILE ENTERS INTO FORCE
The EU-Chile Interim Trade Agreement (ITA) entered into force this week following Chile’s ratification. Signed in December 2023, the ITA aims to strengthen the two jurisdictions’ economic ties whilst fostering sustainable trade and secure the EU’s supply chains critical for the green transition. Notably, by eliminating tariffs and easing cross-border investments, the agreement aims to secure reliable access to critical raw materials like lithium, copper, and green hydrogen, amongst others. More broadly, this partnership also gives legal certainty to EU businesses by safeguarding intellectual property rights and protecting 234 typical European and Chilean food and drinks products. The Advanced Framework Agreement (AFA) will replace ITA once all EU Member States have completed their ratification processes.

COMING UP NEXT WEEK

• 10-11 February: Informal Council Meeting of EU ministers for development. On the agenda: Resilience of public institutions and societies in developing countries.
• 10-13 February: European Parliament’s Plenary. On the agenda: European Central Bank Annual report, new trade area: cooperation or tariffs, EU support for Ukraine, presentation of Commission work program, votes, Competitiveness Compass.
• 11 February: College of Commissioners. On the agenda: 2025 Commission work programme; Simplification Strategy; Roadmap for new Multiannual Financial Framework.

Tuomas Tierala, Managing Partner Brussels, Kreab

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Kreab • Tel: +32 2 737 6900 • tuomas.tierala@kreab.com • www.kreab.com/brussels • X: @KreabEU  •  LinkedIn: Kreab Worldwide