Growing pains
At finance industry gatherings in D.C.’s office buildings and historic hotels, the EU’s efforts to boost growth and stimulate investment by removing fragmentation in European capital markets was seen by industry and regulators alike with either curiosity, because they don’t understand the project, or skepticism because they doubt the EU can get over its internal rivalries and integrate.
This week Bessent reiterated the U.S. mantra that “the biggest risk to financial stability is a lack of growth,” accusing the EU of being “unable to follow the Draghi Report … on how it would increase growth.” The existence of the bloc should “facilitate trade among the members, make it more seamless, create more prosperity, and it turns out it has probably been a hindrance,” he said.
The Europeans struck a more conciliatory tone. U.K. Finance Minister Rachel Reeves said Britain’s trade deal with the U.S. is “in both of our countries’ interests,” and said technical work with U.S. counterparts on the future of capital markets and financial services is moving forward. “That relationship and that work together continues,” she said.
EU Economy Commissioner Valdis Dombrovskis also played up the transatlantic ties. “In the face of common challenges, the U.S. and the EU are stronger together. While differences are clear, we have always managed to work through them and should continue to do so,” he told POLITICO.
But after weeks of downgrading growth forecasts, trying to shore up the continent’s energy security, and staving off the risks of superpowered AI to European banks, that diplomatic resolve may be starting to wear thin.
Although the EU is committed to “constructive relations” with the U.S., Dombrovskis said, “we will not turn a blind eye to any risks to our interests.”
