Wolfgang Munchau

In our latest Eurointelligence podcast, our team discusses the multiple shocks to Europe stemming from the rise in the oil price - on the Russia-Ukraine war, on the European car industry, on inflation and interest rates; and energy security. eurointelligence.com/Podcast…

The reason for the return of diplomacy between Europe and Russia is the change in the geopolitical and geoeconomic environment. With oil at over $100, and France on the brink of a debt crisis, Europe is politically and financially not able to maintain its support for Ukraine at the level needed for Ukraine to resist Russia's advance, let alone push back. At no point during the last five years did western European leaders have a strategy to secure Ukraine's victory. Nor did they have a strategy for peace. It is too early to say what yesterday's call between Støre, Stubb and Putin will accomplish, but we are now entering a different phase. eurointelligence.com

in our latest podcasts, our team discusses the spread of the French riots to other European countries and the underlying reasons behind this fledgling insurrection. eurointelligence.com/Podcast…

It is delusional to think that the EU is getting tough on China. Whenever the EU imposes a sanction on a Chinese company, China responds by restricting rare-earth exports, on which EU supply chains are critically dependent. The reality of the bilateral relationship is one of an unchanged deep co-dependency. eurointelligence.com/

In today's podcast, the Eurointelligence team discusses whether France will have a financial crisis, and what might happen in the event. eurointelligence.com/Podcast…

In our lead story we write about the continuing depletion of stocks of crude oil and derivatives, despite the recovery of flows through the strait of Hormuz. The economic impact will reverberate for some time to come. This is not a one-off shock. eurointelligence.com

In our latest podcast, the Eurointelligence team discusses Pedro Sanchez' bold decision to call early elections. He is the last of the remaining big beast of European social democracy - an exceptional politican, but not a role model for others. eurointelligence.com/Podcast…

Today we are starting a mini-series on issues that nobody in the Rejoin camp in the UK has on their radar screen and that will hit them like a ton of bricks. In today’s first instalment, we write about a return of the sovereign debt crisis, now an increasingly likely scenario given political developments in France. This might not sit easy with the storytelling about the EU’s apparently so successful economy. eurointelligence.com

Our lead story makes a point that European policy makers, and the media, are to much focused on AI going wrong. From a European perspective, the more likely scenario of AI to succeed and for Europe being left out, constitutes a far bigger systemic risk. eurointelligence.com

Macron and Tusk yesterday gave stark warnings about an escalation of the Ukraine war this winter as part of which Russia would target critical infrastructure and supply lines from Nato countries to Ukraine. Our lead story this morning. eurointelligence.com

In our latest podcast, our team discusses why the rise in the oil price understates the wider economic effects of the escalating war in the Middle East eurointelligence.com/Podcast…

Central banks used to base their monetary policy decisions on the Taylor rule – that worked well in practice, but not in theory. Today they use technical models that result in persistent overshoots of targeted inflation. In the euro area, the ECB’s policy rate is 2.5%. Under the Taylor rule, the right rate would be between 3.8-5.8%, depending on what assumptions one makes about the equilibrium real interest rate. Even under the most “optimistic” assumption, the current interest rates will not address the price shock we are currently observing. eurointelligence.com

In my latest Eurointelligence column, I discuss how and why the EU has lost the AI race and why the idea of the EU closing the gap with the US or China is delusional. eurointelligence.com/Columns

In our latest podcast, the Eurointelligence team discusses the persistent strength of the AfD, and how this compares to, and differs from the rise of far-right parties elsewhere in Europe. eurointelligence.com/Podcast…

The economic consequences of the high oil prices are much worse for Europe than the $107 Brent benchmark would suggest. Prices for petrol and diesel have risen by even more, as has the price for natural gas. Another inflation shock lies ahead. eurointelligence.com

It took the CDU two days after their election disaster in Saxony-Anhalt to jump on the “Lets Ban the AfD” bandwagon. The chances of this happening are next to zero because the strict constitutional hurdles for a party ban are not met. What we are seeing here, is the political centre in search of new ways not to solve the problem. eurointelligence.com

One of the reasons for the Icelandic No vote is that the pro-EU campaign made the same errors as the pro-Remain campaign in the UK did 10 years ago. They reduced the debate to silly economic arguments. In the Icelandic case it was the ludicrous assertion that joining the euro would lower inflation. eurointelligence.com

The French far-left talks about debt cancellation by the ECB. The German far-right wants Germany to leave the euro, on the grounds that balance sheet operations have turned the euro a weak currency. Not hard to see how those two discourses interact politically. None of this is about to happen, but it is significant that the future of euro has become part of the political discourse. eurointelligence.com

If you are as dependent on China for your supply chains as Germany has become, you would be hopping mad to support strong retaliatory action. It would also be based on a wrong diagnosis of Europe’s lagging competitiveness. This is not due to currency manipulation, but under-investment that has been going on for decades eurointelligence.com