Think Tank

On 6 December 2024, the European Union (EU) and the four founding members of Mercosur – Argentina, Brazil, Paraguay and Uruguay – reached a political agreement on a free trade agreement that would form part of a wider Partnership Agreement including political dialogue and cooperation. The 2024 text of the trade pillar seeks to adjust an earlier political agreement of 28 June 2019 to EU demands for Mercosur to make stronger sustainability commitments, notably in respect to the Paris Agreement, and ...

This paper examines the impact of US protectionist trade policies on the euro area economy, focusing on macroeconomic and financial repercussions. While direct tariff effects are mitigated by exchange rate adjustments and ECB policies, broader risks arise from global trade disruptions and financial contagion. Increased risk premia on US bonds elevate European financing costs, posing fiscal challenges. We highlight the importance of trade diversification, innovation incentives, and prudent monetary ...

The euro area experienced an unprecedented surge of inflation in 2021 and 2022 followed by a decline in 2023 and 2024. The ECB raised policy rates too late. Simple rules would have prescribed an earlier response. The policy easing since summer 2024, however, is quite in line with such rules. This experience provides a number of lessons that could lead to improvements in the policy strategy that is currently under review. The current level of policy rates appears appropriate. However, there are some ...

This paper covers possible defence options under the European economic governance framework by reviewing the proposal for a ReArm Europe plan floated by the President of the Commission Ursula von der Leyen. The paper also analyses flexibilities under the EU budget, EIB and ESM financing while also assessing potential market challenges and public procurement. This paper will be regularly updated.

Slovakia aims to reach climate neutrality by 2050 (see trajectory in Figure 1).The country accounted for 1.1 % of the EU's total greenhouse gas (GHG) emissions in 2023 and achieved an emissions reduction of 27.3 % from 2005 to 2023, slightly below the EU average reduction of 30.2 % over the same period. Emissions from sectors under the EU emission trading system (ETS) fell by 41.7 %. For the effort-sharing sectors, Slovakia largely over-achieved its targets for 2020. Slovakia's land use, land-use ...