POST ELEMENT STYLE MASONRY
“Check against delivery”
Monsieur le Président, cher Emmanuel,
Honourable Dean,
Esteemed Professors,
Ladies and Gentlemen,
It is an honour to be here in the Sorbonne – surrounded by some of the brightest minds in the world. Dear Emmanuel, you once said that before being a university, the Sorbonne was an idea. An idea of scientific excellence, collaboration and – if I may add – of opportunity. And no story encapsulates this better than that of Maria Salomea Skłodowska-Curie, also known a Marie Curie. In her homeland of Poland, then under Russian occupation, women were barred from universities. So, she and her sister joined underground night schools, dreaming of freedom through knowledge. That was at the end of the 19th century. Her journey would eventually bring her to La Sorbonne. Here she was allowed to study and do her research. She ultimately revolutionised medicine and physics. Maria Skłodowska-Curie became the first woman to win a Nobel Prize, the first person to win a Nobel Prize twice, and the only person to win a Nobel Prize in two different fields. And her discoveries and her work on radiation saved millions of lives. I start with this story not just because we are here in the Sorbonne – or even because it shows how scientific excellence can change the course of destiny. But because this is also a story about freedom. Freedom to learn and invent. It is a story about openness. Openness to turn ideas into groundbreaking discoveries. And it is a story about collaboration beyond borders. And this is exactly what Europe and the world need more today. Because I am convinced that science remains the fuel of progress and growth for our societies. Without the ideas and breakthroughs that come from scientific research, progress sooner or later stagnates.
Unfortunately, as your discussions have shown today, the role of science in today’s world is questioned. The investment in fundamental, free and open research is questioned. What a gigantic miscalculation. I believe that science holds the key to our future here in Europe. Without it, we simply cannot address today’s global challenges – from health to new tech, from climate to oceans. And as I look around the room – and at all the young people here – I know we are far from having run out of new ideas or bright minds. In fact, the truth is we have barely scratched the surface of the knowledge that science can offer us. So more than ever we need to stand up for science. Science that is universal – shared by all humanity – and that is unifying. Because the pursuit of knowledge and the yearning to understand how things work are values that bring us together as people, as it has done today. We can all agree that science has no passport, no gender, no ethnicity or political party. And as such it does play a crucial role in connecting people and creating a shared future in today’s fractured world. We believe that diversity is an asset of humanity and the lifeblood of science. It is one of the most valuable global goods and it must be protected.
That is why I am here today, to say that Europe will always choose science. And Europe will always make the case for the world’s scientists to Choose Europe. Scientific endeavour runs deep through European history – from Pythagoras and Aristotle in Ancient Greece to Galileo and Copernicus in the Renaissance period or to Koch or Pasteur in latter centuries. The oldest university in Europe was founded in Bologna, where teaching started as far back as 1088. And Europe was the home of the Scientific Revolution which saw one of the most consequential transformations in human history – thanks to breakthroughs in mathematics, astronomy, biology and much more. That tradition lives on today. Europe already has the second highest scientific output in the world. It is home to over 2 million researchers – one quarter of the world’s total. We lead in green tech, health, economics, business and social sciences. We excel in areas of scientific research and technologies that are pivotal to our future – from aerospace to robotics, from automotive to engineering, from biotechnologies to pharmaceuticals, just to name a few.
And we have a huge number of natural advantages that help set us apart. The first is sustained and stable investment from Europe and its Member States. Europe runs the world’s largest international research programme, Horizon Europe. It has a firepower of over EUR 93 billion. Over the last 40 years, the European Union has funded 33 Nobel Prize laureates. European support has made possible breakthroughs in genome sequencing and mRNA vaccines. It spurred the development of cutting-edge microchips, and even led to the first image of a black hole. These examples show what we all know – the return on investment in science is unparalleled. We have worldclass research infrastructure. From particle physics to molecular biology, and from space exploration to nuclear fusion. This helps make Europe a leader in fundamental research.
We have a world-leading supercomputing infrastructure, EuroHPC, and we are investing massively in AI, quantum and digital research. Finally, we also have a proud tradition of open and collaborative science. We uphold the principles of open science, open education and data sharing. Our European Research Council is run not by politicians, but by scientists, for scientists. Our Horizon Europe programme is a magnet for global cooperation. From the UK to Switzerland, from Canada to South Korea, more and more countries want to join it. We see scientists from across the world collaborating here in Europe. Take CERN as a case in point. Founded 70 years ago to carry out cutting-edge research that no individual nation could do alone, it is today the world-leading laboratory for high-energy particle physics and related technologies. Researchers from over 100 nationalities working together for the good of humanity. This is how science should work, and it is why scientific freedom and collaboration must always be at the heart of our institutions and our infrastructure.
Ladies and Gentlemen,
Europe has everything that is needed for science to thrive: we have the stable and sustained investment; we have the infrastructure; we have the commitment to open and collaborative science, we have a social market economy that delivers access to good schools, education and healthcare for all. But at the same time, we have to be alert and work on our deficiencies. We know that researchers still face too much – or too complex – bureaucracy here in Europe compared to some other parts of the world. We know that the path from fundamental research to business and to market is not straightforward or fast enough here in Europe. We know that we need to offer the very best a longer-term perspective. We are ready to tackle this head on.
We want Europe to continue to be at the forefront of fundamental research. We want Europe to be a leader in priority technologies from AI to quantum, from space, semiconductors and microelectronics to digital health, genomics and biotechnology. We want scientists, researchers, academics and highly skilled workers to choose Europe. And this is why today I am presenting the first elements of our Choose Europe Initiative.
The first priority is to ensure that science in Europe remains open and free. This is our calling card. We must do everything we can to uphold it – now more than ever before. We want to strengthen the free movement of knowledge and data across Europe – just as we do for goods, talents and capital across our Single Market. And we want to enshrine freedom of scientific research into law in a new European Research Area Act. Because as threats rise across the world, Europe will not compromise on its principles. Europe must remain the home of academic and scientific freedom.
The second element of Choose Europe is financing. Science is an investment – and we need to offer the right incentives. This is why I can announce that we will put forward a new EUR 500 million package for 2025-2027 to make Europe a magnet for researchers. This will help support the best and the brightest researchers and scientists from Europe and around the world. We aim to create a new seven-year ‘super grant’ under the ERC to help offer a longer-term perspective to the very best. Through the ERC, we are already supporting researchers who relocate to Europe with a top-up beyond their grant. We are now doubling the amount they can receive this year. And I want to extend this support for 2026 and 2027.
At the same time, we must also focus on the next generation. This is why we are also increasing support to early career scientists through our Choose Europe pilot under Maria Skłodowska-Curie. Those that choose Europe will benefit from higher allowances and longer contracts. We will expand this support over the next two years, with targeted incentives in frontier fields, like AI. For the mid- and long-term: together with our Member States, we want to reach the 3% of GDP target for investment in research and development by 2030. And we will put forward ambitious proposals on research and innovation funding in the next long-term budget. Because we know that an investment in science is an investment into our future.
The third part of Choose Europe is the need to fast-track the pathway – from breakthrough science to transformative innovation and business opportunities. This is why we will put forward a first ever European Innovation Act and a Startup and Scaleup Strategy, to remove regulatory and other barriers, and to facilitate access to venture capital for innovative European startups and scaleups.
Last but not least: We have to make it easier and more attractive to come to Europe for research. We will better link up researchers with research institutions. We will speed up the process around entering and staying in Europe. We already have an excellent platform that links researchers worldwide with thousands of jobs in Europe, as well as providing visa support and career guidance. We now want to support public and private institutions to better link up to highly skilled workers and researchers, and to speed up and simplify the entry for top researchers. Because bringing the best from across the world is about bringing out the best of Europe.
Ladies and Gentlemen,
Europe has made its choice. We are choosing to start a new age of invention and ingenuity. We are choosing to put research and innovation, science and technology, at the heart of our economy. We are choosing to be the continent where universities are pillars of our societies and our way of life. We are choosing to be the continent where innovation serves humanity, where global talent is welcomed. Because as the history of the Sorbonne and our excellent universities show, progress thrives on freedom, openness and collaboration. So, to every researcher, at home or abroad, to every young girl and boy who dreams of a life in science, as Maria Skłodowska-Curie once did, our message is clear: Choose Science. Choose Europe.
Compliments of the European CommissionThe post European Commission | Closing speech by President von der Leyen at the ‘Choose Europe for Science’ event at La Sorbonne first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.
ECB establishes an innovation platform with around 70 market participants on new platform
Participants to test digital euro payment functionalities and explore innovative use cases
Findings to be shared in report later this year
The European Central Bank (ECB) has established an innovation platform to collaborate with European stakeholders in the context of the digital euro project. almost 70 market participants – including merchants, fintech companies, start-ups, banks and other payment service providers – have signed up to work with the ECB to explore digital euro payment functionalities and use cases. Following a call for interest published in October 2024, the ECB received over 100 applications from around 70 participants, who joined one or both of the workstreams “pioneers” and “visionaries”.
The innovation platform simulates the envisaged digital euro ecosystem, in which the ECB provides the technical support and infrastructure for European intermediaries to develop innovative digital payment features and services at European level.
The pioneers workstream is investigating how conditional payments in digital euro (i.e. transactions that are made automatically when predefined conditions are met, such as the delivery of a package bought online) could be implemented from a technical standpoint. It is also developing potential use cases for day-to-day payments.
Pioneers will be exploring how to integrate the simulated digital euro interfaces with their platforms. The ECB is providing participants with technical support and specifications, such as an application programming interface, to conduct independent work on use cases of their choice. Pioneers will summarise their findings in a report, which the ECB will review thoroughly to inform its work on the digital euro project.
The visionaries workstream is conducting research on new digital euro use cases and how they could help address societal challenges, such as digital financial inclusion. For instance, the ability to open a digital euro wallet in any post office could guarantee free access to digital euro services, even for people without a bank account or access to digital devices.
Visionaries will share and discuss their proposals with the ECB in dedicated workshops that will run until May 2025.
“We welcome the huge amount of interest that market participants have shown in this exciting initiative,” said Executive Board member Piero Cipollone. “The breadth and creativity of the proposals highlights the digital euro’s potential as a catalyst for financial innovation in Europe, including the development of new solutions that further enhance the payment experience for Europeans and create market opportunites”.
Findings from both workstreams will be published by the ECB in a report to be published later this year.
Compliments of the European Central BankThe post ECB partners with private sector through digital euro innovation platform first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.
By Vanessa Gunnella, Giovanni Stamato and Alicja Kobayashi
Published as part of the ECB Economic Bulletin, Issue 3/2025.
This box examines how the tariffs that the United States introduced on Chinese products in 2018 influenced euro area trade patterns. It looks at whether euro area exporters were able to gain market share in the United States as their competitiveness increased vis-à-vis their Chinese counterparts. It also assesses how Chinese export patterns changed, highlighting how Chinese exports were diverted from the United States to alternative markets, including the euro area. Examining the outcomes of these past measures can give an indication of the potential channels through which current US tariffs on Chinese goods could affect the euro area.
Trade tensions in 2018 led to a significant decline in Chinese exports to the United States, which prompted Chinese exporters to seek other markets. The US Administration implemented numerous tariff and non-tariff measures targeting Chinese goods, significantly increasing trade restrictions from 2018 onwards. As a result of the measures, the effective tariff rate on Chinese imports to the United States increased by almost 18 percentage points. This escalation caused a marked decrease in aggregate Chinese exports to the United States, with China’s share of the US import market declining substantially from its level in 2017. Although the COVID-19 pandemic makes it difficult to disentangle the effects of the increased trade restrictions, it appears that Chinese exporters sought alternative markets when the US tariffs hit. This included shifting trade towards the euro area, with China’s market share of euro area imports growing more rapidly in the years after the tariffs were imposed (Chart A).
Chart A
Import market shares and US import restrictions on China
(left-hand scale: percentages; right-hand scale: number of measures in place)
Sources: Trade Data Monitor, Global Trade Alert and ECB staff calculations.
Notes: The green line shows the cumulated number of tariff and non-tariff measures imposed on Chinese imports by the United States. For the market shares, trade in goods is considered.
A detailed analysis of product-level trade data reveals that the US tariffs had a significant impact on Chinese exports, with products possibly being diverted to the euro area. By analysing granular six-digit product-level trade data, we can identify Chinese goods that were affected by US tariffs and assess the resulting trade diversion.[1] Our findings indicate that exports of the affected products to the United States decreased significantly, contributing to a substantial decline in China’s market share in the United States. Chart B, panel a, shows how these tariff-affected products – which include clothing, IT equipment, auto parts and furniture – primarily drove down China’s share of US aggregate imports. Concurrently, these products found alternative markets, such as neighbouring countries in Asia and, notably, the euro area (Chart B, panel b).[2] Indeed, it appears that, from 2019, goods subject to US tariffs were redirected to the euro area, significantly boosting China’s market share. While COVID-19-related products like medical equipment and electronics – such as computers and related IT equipment – may have reinforced this trend during the pandemic, the structural change in trade flows persisted afterwards.
Chart B
Changes in import market shares
(percentage point change since 2017)
Sources: Trade Data Monitor, Peterson Institute for International Economics, and ECB staff calculations.
Notes: Products subject to tariffs are Chinese products affected by US import tariffs, as reported in official documents. Shares are computed using import values. The latest observations are for the fourth quarter of 2023.
The euro area, however, did not increase its market share in the United States. With tariffs applied to Chinese imports to the United States, euro area goods would have been more price competitive in US markets. Yet, compared with 2017, the euro area did not substantially increase its share of the US import market. Developments in market shares do not seem to be related to the US tariffs on China (Chart B, panel c). Other countries with export baskets that are more similar to China’s may have been able to increase their market share in the United States as supply chains were reconfigured to reduce direct US sourcing from China.[3]
Empirical results from a gravity model confirm that some of China’s exports to the United States were redirected to the euro area. A structural gravity model on bilateral sector-level trade flows in manufacturing from 2012 to 2023 is used to assess the trade diversion effects.[4] The results (Chart C) confirm a significant decrease in Chinese exports to the United States. This was related to the trade measures, as these roughly doubled in number over the time interval considered, dampening US imports from China by around 10%. Chinese exports were largely redirected towards South and South-East Asian countries, the euro area and other global markets. The trade restrictions imposed by the United States on Chinese goods led to a statistically significant increase of 2%-3% in euro area imports from China.
Chart C
Empirical evidence of the effect of US import restrictions on Chinese exports
(effects, percentages)
Sources: UN Comtrade, ADB-MRIO, Global Trade Alert, Egger and Larch RTA database and ECB staff calculations.
Notes: The bars represent the coefficient of US restrictions on imports from China, interacted with dummy variables for bilateral flows from 2019 from a sector gravity regression. The effects are computed by multiplying the estimated elasticities by the observed change in US restrictions on Chinese imports since 2019. Blue bars denote statistically significant elasticities. The dependent variable is nominal exports in goods. Estimation is performed using the Poisson pseudo-maximum likelihood estimator. The sample period is 2012-23 and includes 62 countries and 15 sectors. We account for bilateral/sector time-varying controls, including bilateral sector time-varying trade-restrictive measures, sector time-varying border effects, sector-exporter/sector-importer-year fixed effects and exporter-importer-sector fixed effects. Standard errors are clustered by country pair and sector.
As global trade dynamics shifted, China strategically redirected its exports, with the euro area emerging as a key alternative market owing to the structural similarities between Chinese exports to the United States and those to the euro area. Similarity metrics (Chart D) illustrate that, of China’s trading partners, the euro area was considered to be among the most similar to the United States. This made redirecting trade towards the euro area a natural channel for Chinese exporters attempting to find alternative markets. In parallel, China redirected trade even more strongly to other countries, particularly in Asia. However, this appears to be for different reasons, as the similarities between Chinese exports and the imports of certain South and South-East Asian countries were much less pronounced. Rather, the redirection of Chinese exports to these countries may have reflected efforts to reconfigure Chinese supply chains towards neighbouring countries.[5]
Chart D
Similarity between China’s exports to the United States and its exports to other regions
(index value)
Sources: Trade Data Monitor; Finger, J. M. and Kreinin, M. E., “A measure of export similarity’ and its possible uses”, The Economic Journal, Vol. 89, No 356, pp. 905-912, December 1979; and ECB staff calculations.
Notes: The chart shows the export similarity index (ESI) by Finger and Kreinin. The ESI values range from 0 to 100, indicating the degree of similarity of export structures. Higher values suggest greater similarity in the sectoral composition of exported goods. North America comprises Canada and Mexico, and South/South-East Asia comprises India, Indonesia, Thailand and Vietnam.
Empirical findings confirm that the euro area did not increase its exports to the United States. The gravity model is used to explore how US imports were reconfigured as restrictions on Chinese exports were imposed. Results from the gravity regression show that, as Chinese exports to the United States decreased, South and South-East Asian countries increased their exports to the United States as global supply chains shifted production to China’s neighbours, confirming the findings in the previous paragraph. The gravity model shows that euro area exports to the United States did not increase significantly (Chart E). This result again reflects export similarities. In 2018 the composition of exports from South and South-East Asian countries to the United States was very similar to that of Chinese exports to the United States. Interestingly, as other South and South-East Asian countries replaced China in the United States, their export baskets became increasingly similar, confirming that these countries progressively substituted China as US trading partners. Conversely, among the United States’ major trading partners, the composition of the euro area’s export basket was the least similar to China’s.
Chart E
Empirical evidence of the impact of restrictions on US imports from China
(effects, percentages)
Sources: UN Comtrade, ADB-MRIO, Global Trade Alert, Egger and Larch RTA database and ECB staff calculations.
Note: See notes to Chart C.
Trade barriers are being raised further, which has consequences for the euro area. A renewed period of trade tensions between the United States and China could have negative effects for euro area net trade and growth. However, any trade diversion effects will greatly depend on the configuration of US bilateral trade barriers and the responses to them. In addition, it is crucial to consider that trade structures have evolved over the past seven years, which could result in effects that differ from those observed in previous periods.
See Haberkorn, F., Hoang, T., Lewis, G., Mix, C., and Moore, D., “Global trade patterns in the wake of the 2018-2019 U.S.-China tariff hikes”, FEDS Notes, Board of Governors of the Federal Reserve System, 12 April 2024.
See Bown, C. P., “Four years into the trade war, are the US and China decoupling?”, PIIE RealTime Economics Blog, 20 October 2022.
See Alfaro, L. and Chor, D., “Global supply chains: The looming ‘great reallocation’”, Working Paper Series, No 31661, National Bureau of Economic Research, September 2023 and Freund, C., Mattoo, A., Mulabdic, A. and Ruta, M. “Is US trade policy reshaping global supply chains?”, Journal of International Economics, Vol. 152, 104011, November 2024.
The regression controls for pandemic-period effects by including a) time-varying sectoral border effects in trade costs, which capture all global unobservable factors affecting international trade compared with domestic; and b) exporter and importer sector-time fixed effects, which control for any sector-specific dynamics in countries’ exports and imports, including sector-specific demand or supply factors like those observed during the pandemic. Price levels are also taken into account by means of country-time fixed effects.
See Freund, C., Mattoo, A., Mulabdic, A. and Ruta, M., op. cit. The paper finds that countries that have replaced China in the US market are also experiencing faster import growth from China. In Xue, S., Trade Wars with FDI Diversion, Princeton University, August 2024, the author finds that countries like Vietnam, which are more susceptible to trade diversion, exhibited relatively higher inward foreign direct investment stocks following the China-US trade war.
Compliments of the European Central BankThe post Transatlantic Trade Monitor: Facts You Need Now | The implications of US-China trade tensions for the euro area – lessons from the tariffs imposed by the first Trump Administration first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.
POST ELEMENT STYLE MASK ON IMAGE
“Check against delivery”
Monsieur le Président, cher Emmanuel,
Honourable Dean,
Esteemed Professors,
Ladies and Gentlemen,
It is an honour to be here in the Sorbonne – surrounded by some of the brightest minds in the world. Dear Emmanuel, you once said that before being a university, the Sorbonne was an idea. An idea of scientific excellence, collaboration and – if I may add – of opportunity. And no story encapsulates this better than that of Maria Salomea Skłodowska-Curie, also known a Marie Curie. In her homeland of Poland, then under Russian occupation, women were barred from universities. So, she and her sister joined underground night schools, dreaming of freedom through knowledge. That was at the end of the 19th century. Her journey would eventually bring her to La Sorbonne. Here she was allowed to study and do her research. She ultimately revolutionised medicine and physics. Maria Skłodowska-Curie became the first woman to win a Nobel Prize, the first person to win a Nobel Prize twice, and the only person to win a Nobel Prize in two different fields. And her discoveries and her work on radiation saved millions of lives. I start with this story not just because we are here in the Sorbonne – or even because it shows how scientific excellence can change the course of destiny. But because this is also a story about freedom. Freedom to learn and invent. It is a story about openness. Openness to turn ideas into groundbreaking discoveries. And it is a story about collaboration beyond borders. And this is exactly what Europe and the world need more today. Because I am convinced that science remains the fuel of progress and growth for our societies. Without the ideas and breakthroughs that come from scientific research, progress sooner or later stagnates.
Unfortunately, as your discussions have shown today, the role of science in today’s world is questioned. The investment in fundamental, free and open research is questioned. What a gigantic miscalculation. I believe that science holds the key to our future here in Europe. Without it, we simply cannot address today’s global challenges – from health to new tech, from climate to oceans. And as I look around the room – and at all the young people here – I know we are far from having run out of new ideas or bright minds. In fact, the truth is we have barely scratched the surface of the knowledge that science can offer us. So more than ever we need to stand up for science. Science that is universal – shared by all humanity – and that is unifying. Because the pursuit of knowledge and the yearning to understand how things work are values that bring us together as people, as it has done today. We can all agree that science has no passport, no gender, no ethnicity or political party. And as such it does play a crucial role in connecting people and creating a shared future in today’s fractured world. We believe that diversity is an asset of humanity and the lifeblood of science. It is one of the most valuable global goods and it must be protected.
That is why I am here today, to say that Europe will always choose science. And Europe will always make the case for the world’s scientists to Choose Europe. Scientific endeavour runs deep through European history – from Pythagoras and Aristotle in Ancient Greece to Galileo and Copernicus in the Renaissance period or to Koch or Pasteur in latter centuries. The oldest university in Europe was founded in Bologna, where teaching started as far back as 1088. And Europe was the home of the Scientific Revolution which saw one of the most consequential transformations in human history – thanks to breakthroughs in mathematics, astronomy, biology and much more. That tradition lives on today. Europe already has the second highest scientific output in the world. It is home to over 2 million researchers – one quarter of the world’s total. We lead in green tech, health, economics, business and social sciences. We excel in areas of scientific research and technologies that are pivotal to our future – from aerospace to robotics, from automotive to engineering, from biotechnologies to pharmaceuticals, just to name a few.
And we have a huge number of natural advantages that help set us apart. The first is sustained and stable investment from Europe and its Member States. Europe runs the world’s largest international research programme, Horizon Europe. It has a firepower of over EUR 93 billion. Over the last 40 years, the European Union has funded 33 Nobel Prize laureates. European support has made possible breakthroughs in genome sequencing and mRNA vaccines. It spurred the development of cutting-edge microchips, and even led to the first image of a black hole. These examples show what we all know – the return on investment in science is unparalleled. We have worldclass research infrastructure. From particle physics to molecular biology, and from space exploration to nuclear fusion. This helps make Europe a leader in fundamental research.
We have a world-leading supercomputing infrastructure, EuroHPC, and we are investing massively in AI, quantum and digital research. Finally, we also have a proud tradition of open and collaborative science. We uphold the principles of open science, open education and data sharing. Our European Research Council is run not by politicians, but by scientists, for scientists. Our Horizon Europe programme is a magnet for global cooperation. From the UK to Switzerland, from Canada to South Korea, more and more countries want to join it. We see scientists from across the world collaborating here in Europe. Take CERN as a case in point. Founded 70 years ago to carry out cutting-edge research that no individual nation could do alone, it is today the world-leading laboratory for high-energy particle physics and related technologies. Researchers from over 100 nationalities working together for the good of humanity. This is how science should work, and it is why scientific freedom and collaboration must always be at the heart of our institutions and our infrastructure.
Ladies and Gentlemen,
Europe has everything that is needed for science to thrive: we have the stable and sustained investment; we have the infrastructure; we have the commitment to open and collaborative science, we have a social market economy that delivers access to good schools, education and healthcare for all. But at the same time, we have to be alert and work on our deficiencies. We know that researchers still face too much – or too complex – bureaucracy here in Europe compared to some other parts of the world. We know that the path from fundamental research to business and to market is not straightforward or fast enough here in Europe. We know that we need to offer the very best a longer-term perspective. We are ready to tackle this head on.
We want Europe to continue to be at the forefront of fundamental research. We want Europe to be a leader in priority technologies from AI to quantum, from space, semiconductors and microelectronics to digital health, genomics and biotechnology. We want scientists, researchers, academics and highly skilled workers to choose Europe. And this is why today I am presenting the first elements of our Choose Europe Initiative.
The first priority is to ensure that science in Europe remains open and free. This is our calling card. We must do everything we can to uphold it – now more than ever before. We want to strengthen the free movement of knowledge and data across Europe – just as we do for goods, talents and capital across our Single Market. And we want to enshrine freedom of scientific research into law in a new European Research Area Act. Because as threats rise across the world, Europe will not compromise on its principles. Europe must remain the home of academic and scientific freedom.
The second element of Choose Europe is financing. Science is an investment – and we need to offer the right incentives. This is why I can announce that we will put forward a new EUR 500 million package for 2025-2027 to make Europe a magnet for researchers. This will help support the best and the brightest researchers and scientists from Europe and around the world. We aim to create a new seven-year ‘super grant’ under the ERC to help offer a longer-term perspective to the very best. Through the ERC, we are already supporting researchers who relocate to Europe with a top-up beyond their grant. We are now doubling the amount they can receive this year. And I want to extend this support for 2026 and 2027.
At the same time, we must also focus on the next generation. This is why we are also increasing support to early career scientists through our Choose Europe pilot under Maria Skłodowska-Curie. Those that choose Europe will benefit from higher allowances and longer contracts. We will expand this support over the next two years, with targeted incentives in frontier fields, like AI. For the mid- and long-term: together with our Member States, we want to reach the 3% of GDP target for investment in research and development by 2030. And we will put forward ambitious proposals on research and innovation funding in the next long-term budget. Because we know that an investment in science is an investment into our future.
The third part of Choose Europe is the need to fast-track the pathway – from breakthrough science to transformative innovation and business opportunities. This is why we will put forward a first ever European Innovation Act and a Startup and Scaleup Strategy, to remove regulatory and other barriers, and to facilitate access to venture capital for innovative European startups and scaleups.
Last but not least: We have to make it easier and more attractive to come to Europe for research. We will better link up researchers with research institutions. We will speed up the process around entering and staying in Europe. We already have an excellent platform that links researchers worldwide with thousands of jobs in Europe, as well as providing visa support and career guidance. We now want to support public and private institutions to better link up to highly skilled workers and researchers, and to speed up and simplify the entry for top researchers. Because bringing the best from across the world is about bringing out the best of Europe.
Ladies and Gentlemen,
Europe has made its choice. We are choosing to start a new age of invention and ingenuity. We are choosing to put research and innovation, science and technology, at the heart of our economy. We are choosing to be the continent where universities are pillars of our societies and our way of life. We are choosing to be the continent where innovation serves humanity, where global talent is welcomed. Because as the history of the Sorbonne and our excellent universities show, progress thrives on freedom, openness and collaboration. So, to every researcher, at home or abroad, to every young girl and boy who dreams of a life in science, as Maria Skłodowska-Curie once did, our message is clear: Choose Science. Choose Europe.
Compliments of the European CommissionThe post European Commission | Closing speech by President von der Leyen at the ‘Choose Europe for Science’ event at La Sorbonne first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.
ECB establishes an innovation platform with around 70 market participants on new platform
Participants to test digital euro payment functionalities and explore innovative use cases
Findings to be shared in report later this year
The European Central Bank (ECB) has established an innovation platform to collaborate with European stakeholders in the context of the digital euro project. almost 70 market participants – including merchants, fintech companies, start-ups, banks and other payment service providers – have signed up to work with the ECB to explore digital euro payment functionalities and use cases. Following a call for interest published in October 2024, the ECB received over 100 applications from around 70 participants, who joined one or both of the workstreams “pioneers” and “visionaries”.
The innovation platform simulates the envisaged digital euro ecosystem, in which the ECB provides the technical support and infrastructure for European intermediaries to develop innovative digital payment features and services at European level.
The pioneers workstream is investigating how conditional payments in digital euro (i.e. transactions that are made automatically when predefined conditions are met, such as the delivery of a package bought online) could be implemented from a technical standpoint. It is also developing potential use cases for day-to-day payments.
Pioneers will be exploring how to integrate the simulated digital euro interfaces with their platforms. The ECB is providing participants with technical support and specifications, such as an application programming interface, to conduct independent work on use cases of their choice. Pioneers will summarise their findings in a report, which the ECB will review thoroughly to inform its work on the digital euro project.
The visionaries workstream is conducting research on new digital euro use cases and how they could help address societal challenges, such as digital financial inclusion. For instance, the ability to open a digital euro wallet in any post office could guarantee free access to digital euro services, even for people without a bank account or access to digital devices.
Visionaries will share and discuss their proposals with the ECB in dedicated workshops that will run until May 2025.
“We welcome the huge amount of interest that market participants have shown in this exciting initiative,” said Executive Board member Piero Cipollone. “The breadth and creativity of the proposals highlights the digital euro’s potential as a catalyst for financial innovation in Europe, including the development of new solutions that further enhance the payment experience for Europeans and create market opportunites”.
Findings from both workstreams will be published by the ECB in a report to be published later this year.
Compliments of the European Central BankThe post ECB partners with private sector through digital euro innovation platform first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.
By Vanessa Gunnella, Giovanni Stamato and Alicja Kobayashi
Published as part of the ECB Economic Bulletin, Issue 3/2025.
This box examines how the tariffs that the United States introduced on Chinese products in 2018 influenced euro area trade patterns. It looks at whether euro area exporters were able to gain market share in the United States as their competitiveness increased vis-à-vis their Chinese counterparts. It also assesses how Chinese export patterns changed, highlighting how Chinese exports were diverted from the United States to alternative markets, including the euro area. Examining the outcomes of these past measures can give an indication of the potential channels through which current US tariffs on Chinese goods could affect the euro area.
Trade tensions in 2018 led to a significant decline in Chinese exports to the United States, which prompted Chinese exporters to seek other markets. The US Administration implemented numerous tariff and non-tariff measures targeting Chinese goods, significantly increasing trade restrictions from 2018 onwards. As a result of the measures, the effective tariff rate on Chinese imports to the United States increased by almost 18 percentage points. This escalation caused a marked decrease in aggregate Chinese exports to the United States, with China’s share of the US import market declining substantially from its level in 2017. Although the COVID-19 pandemic makes it difficult to disentangle the effects of the increased trade restrictions, it appears that Chinese exporters sought alternative markets when the US tariffs hit. This included shifting trade towards the euro area, with China’s market share of euro area imports growing more rapidly in the years after the tariffs were imposed (Chart A).
Chart A
Import market shares and US import restrictions on China
(left-hand scale: percentages; right-hand scale: number of measures in place)
Sources: Trade Data Monitor, Global Trade Alert and ECB staff calculations.
Notes: The green line shows the cumulated number of tariff and non-tariff measures imposed on Chinese imports by the United States. For the market shares, trade in goods is considered.
A detailed analysis of product-level trade data reveals that the US tariffs had a significant impact on Chinese exports, with products possibly being diverted to the euro area. By analysing granular six-digit product-level trade data, we can identify Chinese goods that were affected by US tariffs and assess the resulting trade diversion.[1] Our findings indicate that exports of the affected products to the United States decreased significantly, contributing to a substantial decline in China’s market share in the United States. Chart B, panel a, shows how these tariff-affected products – which include clothing, IT equipment, auto parts and furniture – primarily drove down China’s share of US aggregate imports. Concurrently, these products found alternative markets, such as neighbouring countries in Asia and, notably, the euro area (Chart B, panel b).[2] Indeed, it appears that, from 2019, goods subject to US tariffs were redirected to the euro area, significantly boosting China’s market share. While COVID-19-related products like medical equipment and electronics – such as computers and related IT equipment – may have reinforced this trend during the pandemic, the structural change in trade flows persisted afterwards.
Chart B
Changes in import market shares
(percentage point change since 2017)
Sources: Trade Data Monitor, Peterson Institute for International Economics, and ECB staff calculations.
Notes: Products subject to tariffs are Chinese products affected by US import tariffs, as reported in official documents. Shares are computed using import values. The latest observations are for the fourth quarter of 2023.
The euro area, however, did not increase its market share in the United States. With tariffs applied to Chinese imports to the United States, euro area goods would have been more price competitive in US markets. Yet, compared with 2017, the euro area did not substantially increase its share of the US import market. Developments in market shares do not seem to be related to the US tariffs on China (Chart B, panel c). Other countries with export baskets that are more similar to China’s may have been able to increase their market share in the United States as supply chains were reconfigured to reduce direct US sourcing from China.[3]
Empirical results from a gravity model confirm that some of China’s exports to the United States were redirected to the euro area. A structural gravity model on bilateral sector-level trade flows in manufacturing from 2012 to 2023 is used to assess the trade diversion effects.[4] The results (Chart C) confirm a significant decrease in Chinese exports to the United States. This was related to the trade measures, as these roughly doubled in number over the time interval considered, dampening US imports from China by around 10%. Chinese exports were largely redirected towards South and South-East Asian countries, the euro area and other global markets. The trade restrictions imposed by the United States on Chinese goods led to a statistically significant increase of 2%-3% in euro area imports from China.
Chart C
Empirical evidence of the effect of US import restrictions on Chinese exports
(effects, percentages)
Sources: UN Comtrade, ADB-MRIO, Global Trade Alert, Egger and Larch RTA database and ECB staff calculations.
Notes: The bars represent the coefficient of US restrictions on imports from China, interacted with dummy variables for bilateral flows from 2019 from a sector gravity regression. The effects are computed by multiplying the estimated elasticities by the observed change in US restrictions on Chinese imports since 2019. Blue bars denote statistically significant elasticities. The dependent variable is nominal exports in goods. Estimation is performed using the Poisson pseudo-maximum likelihood estimator. The sample period is 2012-23 and includes 62 countries and 15 sectors. We account for bilateral/sector time-varying controls, including bilateral sector time-varying trade-restrictive measures, sector time-varying border effects, sector-exporter/sector-importer-year fixed effects and exporter-importer-sector fixed effects. Standard errors are clustered by country pair and sector.
As global trade dynamics shifted, China strategically redirected its exports, with the euro area emerging as a key alternative market owing to the structural similarities between Chinese exports to the United States and those to the euro area. Similarity metrics (Chart D) illustrate that, of China’s trading partners, the euro area was considered to be among the most similar to the United States. This made redirecting trade towards the euro area a natural channel for Chinese exporters attempting to find alternative markets. In parallel, China redirected trade even more strongly to other countries, particularly in Asia. However, this appears to be for different reasons, as the similarities between Chinese exports and the imports of certain South and South-East Asian countries were much less pronounced. Rather, the redirection of Chinese exports to these countries may have reflected efforts to reconfigure Chinese supply chains towards neighbouring countries.[5]
Chart D
Similarity between China’s exports to the United States and its exports to other regions
(index value)
Sources: Trade Data Monitor; Finger, J. M. and Kreinin, M. E., “A measure of export similarity’ and its possible uses”, The Economic Journal, Vol. 89, No 356, pp. 905-912, December 1979; and ECB staff calculations.
Notes: The chart shows the export similarity index (ESI) by Finger and Kreinin. The ESI values range from 0 to 100, indicating the degree of similarity of export structures. Higher values suggest greater similarity in the sectoral composition of exported goods. North America comprises Canada and Mexico, and South/South-East Asia comprises India, Indonesia, Thailand and Vietnam.
Empirical findings confirm that the euro area did not increase its exports to the United States. The gravity model is used to explore how US imports were reconfigured as restrictions on Chinese exports were imposed. Results from the gravity regression show that, as Chinese exports to the United States decreased, South and South-East Asian countries increased their exports to the United States as global supply chains shifted production to China’s neighbours, confirming the findings in the previous paragraph. The gravity model shows that euro area exports to the United States did not increase significantly (Chart E). This result again reflects export similarities. In 2018 the composition of exports from South and South-East Asian countries to the United States was very similar to that of Chinese exports to the United States. Interestingly, as other South and South-East Asian countries replaced China in the United States, their export baskets became increasingly similar, confirming that these countries progressively substituted China as US trading partners. Conversely, among the United States’ major trading partners, the composition of the euro area’s export basket was the least similar to China’s.
Chart E
Empirical evidence of the impact of restrictions on US imports from China
(effects, percentages)
Sources: UN Comtrade, ADB-MRIO, Global Trade Alert, Egger and Larch RTA database and ECB staff calculations.
Note: See notes to Chart C.
Trade barriers are being raised further, which has consequences for the euro area. A renewed period of trade tensions between the United States and China could have negative effects for euro area net trade and growth. However, any trade diversion effects will greatly depend on the configuration of US bilateral trade barriers and the responses to them. In addition, it is crucial to consider that trade structures have evolved over the past seven years, which could result in effects that differ from those observed in previous periods.
See Haberkorn, F., Hoang, T., Lewis, G., Mix, C., and Moore, D., “Global trade patterns in the wake of the 2018-2019 U.S.-China tariff hikes”, FEDS Notes, Board of Governors of the Federal Reserve System, 12 April 2024.
See Bown, C. P., “Four years into the trade war, are the US and China decoupling?”, PIIE RealTime Economics Blog, 20 October 2022.
See Alfaro, L. and Chor, D., “Global supply chains: The looming ‘great reallocation’”, Working Paper Series, No 31661, National Bureau of Economic Research, September 2023 and Freund, C., Mattoo, A., Mulabdic, A. and Ruta, M. “Is US trade policy reshaping global supply chains?”, Journal of International Economics, Vol. 152, 104011, November 2024.
The regression controls for pandemic-period effects by including a) time-varying sectoral border effects in trade costs, which capture all global unobservable factors affecting international trade compared with domestic; and b) exporter and importer sector-time fixed effects, which control for any sector-specific dynamics in countries’ exports and imports, including sector-specific demand or supply factors like those observed during the pandemic. Price levels are also taken into account by means of country-time fixed effects.
See Freund, C., Mattoo, A., Mulabdic, A. and Ruta, M., op. cit. The paper finds that countries that have replaced China in the US market are also experiencing faster import growth from China. In Xue, S., Trade Wars with FDI Diversion, Princeton University, August 2024, the author finds that countries like Vietnam, which are more susceptible to trade diversion, exhibited relatively higher inward foreign direct investment stocks following the China-US trade war.
Compliments of the European Central BankThe post Transatlantic Trade Monitor: Facts You Need Now | The implications of US-China trade tensions for the euro area – lessons from the tariffs imposed by the first Trump Administration first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.
CAROUSEL OF POSTS
European Commission | Closing speech by President von der Leyen at the ‘Choose Europe for Science’ event at La Sorbonne
Monsieur le Président, cher Emmanuel,
Honourable Dean,
Esteemed Professors,
Ladies and Gentlemen,
It is an honour to be here in the Sorbonne – surrounded by some of the brightest minds in the world. Dear Emmanuel, you once said that before being a university, the Sorbonne was an idea. An idea of scientific excellence, collaboration and – if I may add – of opportunity. And no story encapsulates this better than that of Maria Salomea Skłodowska-Curie, also known a Marie Curie. In her homeland of Poland, then under Russian occupation, women were barred from universities. So, she and her sister joined underground night schools, dreaming of freedom through knowledge. That was at the end of the 19th century. Her journey would eventually bring her to La Sorbonne. Here she was allowed to study and do her research. She ultimately revolutionised medicine and physics. Maria Skłodowska-Curie became the first woman to win a Nobel Prize, the first person to win a Nobel Prize twice, and the only person to win a Nobel Prize in two different fields. And her discoveries and her work on radiation saved millions of lives. I start with this story not just because we are here in the Sorbonne – or even because it shows how scientific excellence can change the course of destiny. But because this is also a story about freedom. Freedom to learn and invent. It is a story about openness. Openness to turn ideas into groundbreaking discoveries. And it is a story about collaboration beyond borders. And this is exactly what Europe and the world need more today. Because I am convinced that science remains the fuel of progress and growth for our societies. Without the ideas and breakthroughs that come from scientific research, progress sooner or later stagnates.
Unfortunately, as your discussions have shown today, the role of science in today’s world is questioned. The investment in fundamental, free and open research is questioned. What a gigantic miscalculation. I believe that science holds the key to our future here in Europe. Without it, we simply cannot address today’s global challenges – from health to new tech, from climate to oceans. And as I look around the room – and at all the young people here – I know we are far from having run out of new ideas or bright minds. In fact, the truth is we have barely scratched the surface of the knowledge that science can offer us. So more than ever we need to stand up for science. Science that is universal – shared by all humanity – and that is unifying. Because the pursuit of knowledge and the yearning to understand how things work are values that bring us together as people, as it has done today. We can all agree that science has no passport, no gender, no ethnicity or political party. And as such it does play a crucial role in connecting people and creating a shared future in today’s fractured world. We believe that diversity is an asset of humanity and the lifeblood of science. It is one of the most valuable global goods and it must be protected.
That is why I am here today, to say that Europe will always choose science. And Europe will always make the case for the world’s scientists to Choose Europe. Scientific endeavour runs deep through European history – from Pythagoras and Aristotle in Ancient Greece to Galileo and Copernicus in the Renaissance period or to Koch or Pasteur in latter centuries. The oldest university in Europe was founded in Bologna, where teaching started as far back as 1088. And Europe was the home of the Scientific Revolution which saw one of the most consequential transformations in human history – thanks to breakthroughs in mathematics, astronomy, biology and much more. That tradition lives on today. Europe already has the second highest scientific output in the world. It is home to over 2 million researchers – one quarter of the world’s total. We lead in green tech, health, economics, business and social sciences. We excel in areas of scientific research and technologies that are pivotal to our future – from aerospace to robotics, from automotive to engineering, from biotechnologies to pharmaceuticals, just to name a few.
And we have a huge number of natural advantages that help set us apart. The first is sustained and stable investment from Europe and its Member States. Europe runs the world’s largest international research programme, Horizon Europe. It has a firepower of over EUR 93 billion. Over the last 40 years, the European Union has funded 33 Nobel Prize laureates. European support has made possible breakthroughs in genome sequencing and mRNA vaccines. It spurred the development of cutting-edge microchips, and even led to the first image of a black hole. These examples show what we all know – the return on investment in science is unparalleled. We have worldclass research infrastructure. From particle physics to molecular biology, and from space exploration to nuclear fusion. This helps make Europe a leader in fundamental research.
We have a world-leading supercomputing infrastructure, EuroHPC, and we are investing massively in AI, quantum and digital research. Finally, we also have a proud tradition of open and collaborative science. We uphold the principles of open science, open education and data sharing. Our European Research Council is run not by politicians, but by scientists, for scientists. Our Horizon Europe programme is a magnet for global cooperation. From the UK to Switzerland, from Canada to South Korea, more and more countries want to join it. We see scientists from across the world collaborating here in Europe. Take CERN as a case in point. Founded 70 years ago to carry out cutting-edge research that no individual nation could do alone, it is today the world-leading laboratory for high-energy particle physics and related technologies. Researchers from over 100 nationalities working together for the good of humanity. This is how science should work, and it is why scientific freedom and collaboration must always be at the heart of our institutions and our infrastructure.
Ladies and Gentlemen,
Europe has everything that is needed for science to thrive: we have the stable and sustained investment; we have the infrastructure; we have the commitment to open and collaborative science, we have a social market economy that delivers access to good schools, education and healthcare for all. But at the same time, we have to be alert and work on our deficiencies. We know that researchers still face too much – or too complex – bureaucracy here in Europe compared to some other parts of the world. We know that the path from fundamental research to business and to market is not straightforward or fast enough here in Europe. We know that we need to offer the very best a longer-term perspective. We are ready to tackle this head on.
We want Europe to continue to be at the forefront of fundamental research. We want Europe to be a leader in priority technologies from AI to quantum, from space, semiconductors and microelectronics to digital health, genomics and biotechnology. We want scientists, researchers, academics and highly skilled workers to choose Europe. And this is why today I am presenting the first elements of our Choose Europe Initiative.
The first priority is to ensure that science in Europe remains open and free. This is our calling card. We must do everything we can to uphold it – now more than ever before. We want to strengthen the free movement of knowledge and data across Europe – just as we do for goods, talents and capital across our Single Market. And we want to enshrine freedom of scientific research into law in a new European Research Area Act. Because as threats rise across the world, Europe will not compromise on its principles. Europe must remain the home of academic and scientific freedom.
The second element of Choose Europe is financing. Science is an investment – and we need to offer the right incentives. This is why I can announce that we will put forward a new EUR 500 million package for 2025-2027 to make Europe a magnet for researchers. This will help support the best and the brightest researchers and scientists from Europe and around the world. We aim to create a new seven-year ‘super grant’ under the ERC to help offer a longer-term perspective to the very best. Through the ERC, we are already supporting researchers who relocate to Europe with a top-up beyond their grant. We are now doubling the amount they can receive this year. And I want to extend this support for 2026 and 2027.
At the same time, we must also focus on the next generation. This is why we are also increasing support to early career scientists through our Choose Europe pilot under Maria Skłodowska-Curie. Those that choose Europe will benefit from higher allowances and longer contracts. We will expand this support over the next two years, with targeted incentives in frontier fields, like AI. For the mid- and long-term: together with our Member States, we want to reach the 3% of GDP target for investment in research and development by 2030. And we will put forward ambitious proposals on research and innovation funding in the next long-term budget. Because we know that an investment in science is an investment into our future.
The third part of Choose Europe is the need to fast-track the pathway – from breakthrough science to transformative innovation and business opportunities. This is why we will put forward a first ever European Innovation Act and a Startup and Scaleup Strategy, to remove regulatory and other barriers, and to facilitate access to venture capital for innovative European startups and scaleups.
Last but not least: We have to make it easier and more attractive to come to Europe for research. We will better link up researchers with research institutions. We will speed up the process around entering and staying in Europe. We already have an excellent platform that links researchers worldwide with thousands of jobs in Europe, as well as providing visa support and career guidance. We now want to support public and private institutions to better link up to highly skilled workers and researchers, and to speed up and simplify the entry for top researchers. Because bringing the best from across the world is about bringing out the best of Europe.
Ladies and Gentlemen,
Europe has made its choice. We are choosing to start a new age of invention and ingenuity. We are choosing to put research and innovation, science and technology, at the heart of our economy. We are choosing to be the continent where universities are pillars of our societies and our way of life. We are choosing to be the continent where innovation serves humanity, where global talent is welcomed. Because as the history of the Sorbonne and our excellent universities show, progress thrives on freedom, openness and collaboration. So, to every researcher, at home or abroad, to every young girl and boy who dreams of a life in science, as Maria Skłodowska-Curie once did, our message is clear: Choose Science. Choose Europe.
Compliments of the European CommissionThe post European Commission | Closing speech by President von der Leyen at the ‘Choose Europe for Science’ event at La Sorbonne first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.
ECB partners with private sector through digital euro innovation platform
Participants to test digital euro payment functionalities and explore innovative use cases
Findings to be shared in report later this year
The European Central Bank (ECB) has established an innovation platform to collaborate with European stakeholders in the context of the digital euro project. almost 70 market participants – including merchants, fintech companies, start-ups, banks and other payment service providers – have signed up to work with the ECB to explore digital euro payment functionalities and use cases. Following a call for interest published in October 2024, the ECB received over 100 applications from around 70 participants, who joined one or both of the workstreams “pioneers” and “visionaries”.
The innovation platform simulates the envisaged digital euro ecosystem, in which the ECB provides the technical support and infrastructure for European intermediaries to develop innovative digital payment features and services at European level.
The pioneers workstream is investigating how conditional payments in digital euro (i.e. transactions that are made automatically when predefined conditions are met, such as the delivery of a package bought online) could be implemented from a technical standpoint. It is also developing potential use cases for day-to-day payments.
Pioneers will be exploring how to integrate the simulated digital euro interfaces with their platforms. The ECB is providing participants with technical support and specifications, such as an application programming interface, to conduct independent work on use cases of their choice. Pioneers will summarise their findings in a report, which the ECB will review thoroughly to inform its work on the digital euro project.
The visionaries workstream is conducting research on new digital euro use cases and how they could help address societal challenges, such as digital financial inclusion. For instance, the ability to open a digital euro wallet in any post office could guarantee free access to digital euro services, even for people without a bank account or access to digital devices.
Visionaries will share and discuss their proposals with the ECB in dedicated workshops that will run until May 2025.
“We welcome the huge amount of interest that market participants have shown in this exciting initiative,” said Executive Board member Piero Cipollone. “The breadth and creativity of the proposals highlights the digital euro’s potential as a catalyst for financial innovation in Europe, including the development of new solutions that further enhance the payment experience for Europeans and create market opportunites”.
Findings from both workstreams will be published by the ECB in a report to be published later this year.
Compliments of the European Central BankThe post ECB partners with private sector through digital euro innovation platform first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.
Transatlantic Trade Monitor: Facts You Need Now | The implications of US-China trade tensions for the euro area – lessons from the tariffs imposed by the first Trump Administration
Published as part of the ECB Economic Bulletin, Issue 3/2025.
This box examines how the tariffs that the United States introduced on Chinese products in 2018 influenced euro area trade patterns. It looks at whether euro area exporters were able to gain market share in the United States as their competitiveness increased vis-à-vis their Chinese counterparts. It also assesses how Chinese export patterns changed, highlighting how Chinese exports were diverted from the United States to alternative markets, including the euro area. Examining the outcomes of these past measures can give an indication of the potential channels through which current US tariffs on Chinese goods could affect the euro area.
Trade tensions in 2018 led to a significant decline in Chinese exports to the United States, which prompted Chinese exporters to seek other markets. The US Administration implemented numerous tariff and non-tariff measures targeting Chinese goods, significantly increasing trade restrictions from 2018 onwards. As a result of the measures, the effective tariff rate on Chinese imports to the United States increased by almost 18 percentage points. This escalation caused a marked decrease in aggregate Chinese exports to the United States, with China’s share of the US import market declining substantially from its level in 2017. Although the COVID-19 pandemic makes it difficult to disentangle the effects of the increased trade restrictions, it appears that Chinese exporters sought alternative markets when the US tariffs hit. This included shifting trade towards the euro area, with China’s market share of euro area imports growing more rapidly in the years after the tariffs were imposed (Chart A).
Chart A
Import market shares and US import restrictions on China
(left-hand scale: percentages; right-hand scale: number of measures in place)
Sources: Trade Data Monitor, Global Trade Alert and ECB staff calculations.
Notes: The green line shows the cumulated number of tariff and non-tariff measures imposed on Chinese imports by the United States. For the market shares, trade in goods is considered.
A detailed analysis of product-level trade data reveals that the US tariffs had a significant impact on Chinese exports, with products possibly being diverted to the euro area. By analysing granular six-digit product-level trade data, we can identify Chinese goods that were affected by US tariffs and assess the resulting trade diversion.[1] Our findings indicate that exports of the affected products to the United States decreased significantly, contributing to a substantial decline in China’s market share in the United States. Chart B, panel a, shows how these tariff-affected products – which include clothing, IT equipment, auto parts and furniture – primarily drove down China’s share of US aggregate imports. Concurrently, these products found alternative markets, such as neighbouring countries in Asia and, notably, the euro area (Chart B, panel b).[2] Indeed, it appears that, from 2019, goods subject to US tariffs were redirected to the euro area, significantly boosting China’s market share. While COVID-19-related products like medical equipment and electronics – such as computers and related IT equipment – may have reinforced this trend during the pandemic, the structural change in trade flows persisted afterwards.
Chart B
Changes in import market shares
(percentage point change since 2017)
Sources: Trade Data Monitor, Peterson Institute for International Economics, and ECB staff calculations.
Notes: Products subject to tariffs are Chinese products affected by US import tariffs, as reported in official documents. Shares are computed using import values. The latest observations are for the fourth quarter of 2023.
The euro area, however, did not increase its market share in the United States. With tariffs applied to Chinese imports to the United States, euro area goods would have been more price competitive in US markets. Yet, compared with 2017, the euro area did not substantially increase its share of the US import market. Developments in market shares do not seem to be related to the US tariffs on China (Chart B, panel c). Other countries with export baskets that are more similar to China’s may have been able to increase their market share in the United States as supply chains were reconfigured to reduce direct US sourcing from China.[3]
Empirical results from a gravity model confirm that some of China’s exports to the United States were redirected to the euro area. A structural gravity model on bilateral sector-level trade flows in manufacturing from 2012 to 2023 is used to assess the trade diversion effects.[4] The results (Chart C) confirm a significant decrease in Chinese exports to the United States. This was related to the trade measures, as these roughly doubled in number over the time interval considered, dampening US imports from China by around 10%. Chinese exports were largely redirected towards South and South-East Asian countries, the euro area and other global markets. The trade restrictions imposed by the United States on Chinese goods led to a statistically significant increase of 2%-3% in euro area imports from China.
Chart C
Empirical evidence of the effect of US import restrictions on Chinese exports
(effects, percentages)
Sources: UN Comtrade, ADB-MRIO, Global Trade Alert, Egger and Larch RTA database and ECB staff calculations.
Notes: The bars represent the coefficient of US restrictions on imports from China, interacted with dummy variables for bilateral flows from 2019 from a sector gravity regression. The effects are computed by multiplying the estimated elasticities by the observed change in US restrictions on Chinese imports since 2019. Blue bars denote statistically significant elasticities. The dependent variable is nominal exports in goods. Estimation is performed using the Poisson pseudo-maximum likelihood estimator. The sample period is 2012-23 and includes 62 countries and 15 sectors. We account for bilateral/sector time-varying controls, including bilateral sector time-varying trade-restrictive measures, sector time-varying border effects, sector-exporter/sector-importer-year fixed effects and exporter-importer-sector fixed effects. Standard errors are clustered by country pair and sector.
As global trade dynamics shifted, China strategically redirected its exports, with the euro area emerging as a key alternative market owing to the structural similarities between Chinese exports to the United States and those to the euro area. Similarity metrics (Chart D) illustrate that, of China’s trading partners, the euro area was considered to be among the most similar to the United States. This made redirecting trade towards the euro area a natural channel for Chinese exporters attempting to find alternative markets. In parallel, China redirected trade even more strongly to other countries, particularly in Asia. However, this appears to be for different reasons, as the similarities between Chinese exports and the imports of certain South and South-East Asian countries were much less pronounced. Rather, the redirection of Chinese exports to these countries may have reflected efforts to reconfigure Chinese supply chains towards neighbouring countries.[5]
Chart D
Similarity between China’s exports to the United States and its exports to other regions
(index value)
Sources: Trade Data Monitor; Finger, J. M. and Kreinin, M. E., “A measure of export similarity’ and its possible uses”, The Economic Journal, Vol. 89, No 356, pp. 905-912, December 1979; and ECB staff calculations.
Notes: The chart shows the export similarity index (ESI) by Finger and Kreinin. The ESI values range from 0 to 100, indicating the degree of similarity of export structures. Higher values suggest greater similarity in the sectoral composition of exported goods. North America comprises Canada and Mexico, and South/South-East Asia comprises India, Indonesia, Thailand and Vietnam.
Empirical findings confirm that the euro area did not increase its exports to the United States. The gravity model is used to explore how US imports were reconfigured as restrictions on Chinese exports were imposed. Results from the gravity regression show that, as Chinese exports to the United States decreased, South and South-East Asian countries increased their exports to the United States as global supply chains shifted production to China’s neighbours, confirming the findings in the previous paragraph. The gravity model shows that euro area exports to the United States did not increase significantly (Chart E). This result again reflects export similarities. In 2018 the composition of exports from South and South-East Asian countries to the United States was very similar to that of Chinese exports to the United States. Interestingly, as other South and South-East Asian countries replaced China in the United States, their export baskets became increasingly similar, confirming that these countries progressively substituted China as US trading partners. Conversely, among the United States’ major trading partners, the composition of the euro area’s export basket was the least similar to China’s.
Chart E
Empirical evidence of the impact of restrictions on US imports from China
(effects, percentages)
Sources: UN Comtrade, ADB-MRIO, Global Trade Alert, Egger and Larch RTA database and ECB staff calculations.
Note: See notes to Chart C.
Trade barriers are being raised further, which has consequences for the euro area. A renewed period of trade tensions between the United States and China could have negative effects for euro area net trade and growth. However, any trade diversion effects will greatly depend on the configuration of US bilateral trade barriers and the responses to them. In addition, it is crucial to consider that trade structures have evolved over the past seven years, which could result in effects that differ from those observed in previous periods.
See Haberkorn, F., Hoang, T., Lewis, G., Mix, C., and Moore, D., “Global trade patterns in the wake of the 2018-2019 U.S.-China tariff hikes”, FEDS Notes, Board of Governors of the Federal Reserve System, 12 April 2024.
See Bown, C. P., “Four years into the trade war, are the US and China decoupling?”, PIIE RealTime Economics Blog, 20 October 2022.
See Alfaro, L. and Chor, D., “Global supply chains: The looming ‘great reallocation’”, Working Paper Series, No 31661, National Bureau of Economic Research, September 2023 and Freund, C., Mattoo, A., Mulabdic, A. and Ruta, M. “Is US trade policy reshaping global supply chains?”, Journal of International Economics, Vol. 152, 104011, November 2024.
The regression controls for pandemic-period effects by including a) time-varying sectoral border effects in trade costs, which capture all global unobservable factors affecting international trade compared with domestic; and b) exporter and importer sector-time fixed effects, which control for any sector-specific dynamics in countries’ exports and imports, including sector-specific demand or supply factors like those observed during the pandemic. Price levels are also taken into account by means of country-time fixed effects.
See Freund, C., Mattoo, A., Mulabdic, A. and Ruta, M., op. cit. The paper finds that countries that have replaced China in the US market are also experiencing faster import growth from China. In Xue, S., Trade Wars with FDI Diversion, Princeton University, August 2024, the author finds that countries like Vietnam, which are more susceptible to trade diversion, exhibited relatively higher inward foreign direct investment stocks following the China-US trade war.
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ECB | Who wants to work more? Revisiting the decline in average hours worked
Published as part of the ECB Economic Bulletin, Issue 3/2025.
In most euro area countries, average hours worked (AHW) per employee have been falling since 2020 and remain below their pre-pandemic levels. The decline was particularly strong in 2020 owing to policy measures to reduce the spread of COVID-19.[1] National accounts data show that, in the fourth quarter of 2024, AHW were still 1.8% lower than a decade before (Chart A) despite the proportion of part-time workers remaining broadly stable over the same period. This decline has been accompanied by rising employment. Over the past decade, employment across the euro area has grown by 13.1% – approximately 19.9 million people. Therefore, total hours worked increased despite the decrease in AHW per employee. In this box, we use data from the European Union Labour Force Survey (LFS) to assess the extent to which the fall in AHW was driven by workers working zero hours (e.g. because of holiday or sick leave) or long hours (e.g. because of overtime) during the reference week.[2]
Chart A
Contribution of average hours worked to change in total hours worked since 2014
(percentage changes)
Sources: Eurostat and national accounts.
Labour supply and labour demand factors have both played a role in the decline of AHW. The economic cycle has a direct impact on hours worked. Before laying off employees, firms first use the intensive labour margin and reduce the number of hours worked by employees. Consequently, lower labour demand can lead to labour hoarding, whereby firms decide to retain their workforce even when the workforce is not working at full capacity, considering the demand drop to be transitory and firing and re-hiring to be too costly.[3] On the other hand, lower labour supply can reduce AHW, for example owing to changing working preferences or higher levels of sick leave and parental leave.[4] If these effects are particularly pronounced for certain demographics (e.g. younger or older employees) or in certain sectors of the economy, compositional effects could have an impact on AHW.
The decline in AHW has largely been driven by the reduced proportion of employees working long hours and the higher proportion working zero hours during the reference week.[5] Detailed data from the LFS up to 2023 confirm the decline in AHW (Chart B), while also highlighting significant differences across countries. Overall, in 2023 AHW (as measured by the LFS)remained 0.6 hours per week, or 1.8%, below their 2014 level. This gap is mainly attributable to a decline in the proportion of employees working long hours (defined as more than 49 hours per week) – from 6.5% to 3.7% of all employees. Although these employees represent only a small proportion of the total workforce, the sharp reduction in their working time has affected the euro area average.[6] Moreover, employees working zero hours had a large impact on AHW during the pandemic. While in 2022 around one-third of the decline in AHW was due to employees working zero hours, their contribution was broadly neutral in 2023, in line with the reduced rate of employees taking sick leave. If we exclude employees working long or zero hours, AHW were 0.1 hours higher in 2023 than in 2014, having remained broadly stable over that period.[7]
Chart B
Average hours worked of all employees and excluding employees working zero/long hours
(hours per week)
Sources: Eurostat and Labour Force Survey.
Notes: The data include employees aged 20-64. The lines show average hours worked during the reference week. “Long hours” is defined as more than 49 hours per week.
The proportion of employees working zero hours has mostly subsided from its pandemic peak. The proportion of employees who did not work during the reference week partially returned to its pre-pandemic level following the peak observed during the pandemic (Chart C). However, it remained elevated, mainly in Spain and France (4 and 1 percentage points higher respectively in 2023 than in 2014). Both countries saw changes in labour regulation, facilitating the entry of marginal employees through permanent seasonal contracts in Spain and apprenticeships in France. These employees more frequently work irregular hours (e.g. during the off-season or training periods) and therefore have more zero-hour working weeks. As previously mentioned, the proportion of employees working zero hours is also still being affected by slightly elevated rates of sick leave and parental leave.
Chart C
Proportion of employees working zero hours and main reason for working zero hours
(percentages and percentage point contributions)
Sources: Eurostat and Labour Force Survey.
Note: The data include employees aged 20-64.
The proportion of people working long hours has continued its declining trend from before the pandemic and has recently fallen faster than the proportion preferring to work long hours. While some employees still aim to work significantly more hours than they actually work (e.g. part-time employees), the proportion of employees who prefer to work long hours is declining (Chart D).4 This trend is largely consistent across euro area countries and also among self-employed workers. While around 29% of self-employed people are working long hours, less than 4% of employees do so.[8] Over the last decade these proportions have declined by 7 and 2 percentage points respectively. Preferences for working long hours have been falling broadly in line with actual long hours worked. This suggests that the fall in long hours worked is at least partly supply-driven and is likely persistent. However, the decline in this proportion after the pandemic was slightly stronger than that in the proportion of workers who prefer to work long hours. This suggests that the fall in AHW has not been entirely driven by reduced preferences for working long hours but may also have been partially affected by low labour demand, which might recover cyclically.
Chart D
Proportion of workers working long hours and preferring to work long hours
(percentages)
Source: Eurostat.
Note: The data include workers aged 20-64.
Relative to 2014, employees working long hours are more often working in the public sector and are less often university-educated than employees working non-long hours. The largest compositional shift was driven by the increase in the rate of high-income earners among employees working long hours. While 59% of all employees working long hours in 2014 were in the top three income deciles, this proportion increased to 68% in 2023 (Chart E). At the same time, a greater proportion of employees with high AHW are working in the public sector than a decade ago, while a smaller proportion are working in the trade and industry sectors. In addition, the proportion of university-educated employees increased among employees working long hours, but to a lesser extent than for the overall economy.
Chart E
Changes in proportion among all employees working/not working long hours since 2014
(percentage point changes)
Source: Eurostat and ECB staff calculations.
Notes: The data include employees aged 20-64. “Not working long hours” is defined as 0-49 hours per week. High- (low-) income employees are employees in the top (bottom) three income deciles. The bars show the change in the proportion of all employees working (not working) long hours who belong to each category. For instance, the proportion of employees working in the public sector increased by 3.3 percentage points for employees working long hours, while it decreased by 0.2 percentage points for employees not working long hours.
See the article entitled “Hours worked in the euro area”, Economic Bulletin, Issue 6, ECB, 2021.
The LFS asks “In total, during the week from Monday 2025 to Sunday 2025, how many hours did you actually work in your main job?” using a reference week for the date. If the employee was absent for the full week (because of holiday, sickness, maternity/paternity leave, etc.), the answer is set to 0. Owing to data concerns in Slovakia and Ireland, we dropped both countries from the euro area aggregate. We classify employees who worked zero hours or more than 49 hours during the reference week as employees with “zero hours” or “long hours” respectively. While these categories only accounted for around 12% and 4% of all employees in 2023, they have a strong impact on the AHW relative to that of employees working “core hours” (1-49 hours per week).
See Baptista, P., Bates, C., Dias da Silva, A., Dossche, M. and Weissler, M., “Those who work less worry more: the effect of lower workloads on consumption”, The ECB Blog, ECB, 20 February 2024.
See Arce, O., Consolo, A., Dias da Silva, A. and Mohr, M., “More jobs but fewer working hours,” The ECB Blog, ECB, 7 June 2023, and Astinova, D., Duval, R., Hansen, N.-J., Park, B., Shibata, I. and Toscani, F., “Dissecting the Decline in Average Hours Worked in Europe”, IMF Working Papers, No 2024/002, IMF, 12 January 2024.
See the article entitled “Explaining the resilience of the euro area labour market between 2022 and 2024”, Economic Bulletin, Issue 8, ECB, 2024.
On average, employees with long hours worked 57 hours per week in 2023 – well above the overall average of 31 hours.
Astinova et al., op. cit., show that AHW have tended to fall and converge across European countries. This convergence has mostly been driven by a decline in the proportion of employees working long hours. AHW for employees working less than 50 hours per week have not converged in recent years.
This proportion varies considerably across occupations. Among managers, the proportion of employees with long hours reached 14% in 2023 (down from 24% in 2014).
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Office of the US Trade Representative | United States and European Union Hold Seventh Joint Committee Meeting under the Bilateral Agreement on Prudential Measures Regarding Insurance and Reinsurance
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European Commission | For every euro invested Horizon Europe generates up to €11 in economic gains
With a total budget of €93.5 billion, Horizon Europe stands at the heart of European competitiveness and innovation strength. Today’s evaluation draws the following conclusions:
Impact: At its halfway point in January 2025, the programme has funded over 15,000 projects with a combined budget of more than €43 billion. Initiatives such as fuel cell electric buses in European cities, new antibiotics, and accessible artificial intelligence (AI) technologies for the scientific community highlight Horizon Europe’s tangible impact.
Scientific excellence: 80% of projects funded by the European Research Council have led to scientific breakthroughs or major advances. Since their launch in 1984, EU research and innovation programmes have supported 35 Nobel Prize winners.
Innovation: Every euro invested in innovative companies through the European Innovation Council (EIC) Fund has attracted over three euros from private investors. This shows that the EIC – a novelty under Horizon Europe – is a game-changer in EU support for startups and scaleups.
Participation: Efforts to close the research and innovation divide among EU Member States are yielding positive results. The share of collaborative projects involving ‘Widening’ countries (those with lower research and innovation performance) has risen to 58%. This is a significant rise from 47% under the previous Horizon 2020 programme.
Simplification: Lump sum grants – a fixed amount to cover the entire project –are estimated to reduce beneficiaries’ administrative costs by 14% to 30% over a project’s lifetime, saving up to €63 million across all lump sum projects signed so far. These grants eliminate financial reporting requirements, making them particularly attractive to small-and-medium-sized enterprises and newcomers.
Next steps
The Commission will use this interim evaluation’s insights to enhance the impact of its policies and programmes. Upcoming Horizon Europe Work Programmes will incorporate immediate measures to simplify the application process and project implementation. Targeted investments will further support researchers and entrepreneurs, ensuring the EU continues to attract, nurture, and retain talent. Improved collaboration will bring stakeholders closer together, helping to translate knowledge and results to market.
A further aim is to reduce barriers for launching and scaling up of innovative companies, through initiatives like the upcoming Start-up and Scale-up Strategy, the European Innovation Act, and the remaining Work Programmes of the EIC.
Background
The interim evaluation draws on a broad evidence base, including extensive quantitative and qualitative analysis. It is based on an open public consultation with nearly 1,700 replies, over 1,000 interviews with project beneficiaries, Commission and national representatives and implementing bodies, as well as surveys of both successful and unsuccessful applicants.
For more information, please contact:
Thomas Regnier, Spokesperson, EUROPEAN COMMISSION
Nika Blazevic, Press Officer, EUROPEAN COMMISSION
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Transatlantic Trade Monitor: Facts You Need Now | How will European consumers react to US tariffs?
The ECB Blog explores how European consumers react to the prospect of higher trade tariffs. It finds that many are very willing to switch away from US products.
The newly imposed US trade tariffs on European products are causing European consumers to think twice about what’s in their shopping cart. Typically, the extent to which tariffs affect consumers depends on the price elasticity of demand for the affected products and services – meaning consumers may switch to cheaper alternatives if prices rise. However, the recent US tariffs may lead to a broader shift in preferences, causing Europeans to move away from US products and brands altogether, regardless of price changes.
This blog post uses data from the ECB’s Consumer Expectations Survey (CES) to get a better idea of how consumers might react to potential tariffs and the reasons behind their choices. In March 2025 CES participants were asked how likely they were to switch away from US products in response to potential US tariffs and a possible retaliation from the EU.[1] Consumers were presented with three different scenarios: potential tariff increases of 5%, 10% or 20%. Respondents were also asked about their main reason for substituting or not substituting US products, with options referring to price, preference or the lack of alternatives.[2]
Preferences are shifting away from US products
Results show that consumers are very willing to actively move away from US products and services. The median substitution score was 80 on the 0 to 100 scale, where 0 indicates no willingness to buy alternatives to US products and 100 signifies a strong willingness to do so.
Chart 1 (panel a) illustrates the median degree of substitution of US products and services by hypothetical tariff percentage and primary reason for switching. While substitution away from US products is high across all tariff scenarios, it is much higher for respondents who indicate a preference shift, rather than the price change triggered by the tariff, as the primary reason. This suggests that consumers’ reactions may not just be a temporary response to tariff increases, but instead signal a possible long-term structural shift in consumer preferences away from US products and brands.
These results differ from similar surveys conducted in the United States, where consumers reported that they would stockpile goods expected to increase in price due to potential tariffs.[3] In the euro area, however, it seems that the mere presence of a tariff would prompt a large share of consumers to reconsider what they buy. Overall, around 44% of respondents expressed a willingness to shift their spending away from US products, irrespective of the tariff rate and primarily due to a preference to switch away (Chart 1, panel b). For this group, the median substitution score was 95 and remained almost unchanged across the randomised tariff increases of 5%, 10% and 20%.
Chart 1
Willingness to substitute and reason for substitution
a) Willingness to substitute by reason and hypothetical tariff size
b) Reason for substitution
(percentage willingness)
(percentage of respondents)
Source: CES.
Notes: The latest observation is for March 2025. Weighted data. Median percentage.
Consumers’ reactions depend on their income
Generally speaking, price elasticity tends to decrease with income. When prices rise, those with lower incomes often have to reconsider their purchasing decisions, while higher earners are less affected. However, CES data show that respondents’ willingness to substitute US products and services increases with each income quintile (Chart 2, panel a). Contrary to the usual pattern, our findings suggest that the more people earn, the more likely they are to switch. This unexpected result could be attributed to the fact that higher-income households may be more motivated by preference than by price concerns. Even though they could afford more expensive US products and services, they consciously choose alternatives.
Chart 2 (panel b) shows that the percentage share of respondents citing preference as their main reason for substitution increases with reported household income, while the influence of price decreases. Likewise, consumers who allocate a larger portion of their spending to discretionary items, such as multimedia or entertainment, have a higher substitution score than consumers who spend more on necessities like food or electricity (Chart 2, panel a). So, it’s preference that matters, not price.
Looking ahead, responses from the CES indicate that ongoing geopolitical and trade developments may lead to significant shifts in consumer spending, particularly concerning US products. Our findings indicate that, in the current context, consumers’ reactions could therefore considerably deviate from standard textbook consumption patterns in response to higher tariffs.
Chart 2
Willingness to substitute and reasons for substitution – income and consumption
a) Willingness to substitute by income quintile and discretionary consumption
(percentage willingness)
b) Reason for substitution by income quintile and discretionary consumption
(percentage of respondents)
Sources: CES.
Notes: The latest observation is for March 2025. Weighted data. Income and consumption quintiles are calculated within each country.
The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.
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The survey question asked participants: “In the first month of the new US presidency, Donald Trump stated that he will impose a trade tariff on EU products. Say that a tariff of 5%/10%/20% is imposed and the EU imposes an equivalent retaliatory tariff on US products, how much are you willing to buy other products instead of US products?” Each tariff percentage (5%, 10%, 20%) was randomly assigned to one-third of the respondents. Participants responded using a slider ranging from 0 to 100, which allowed them to indicate their willingness to buy non-US products. They were instructed: “You can give an answer from 0% to 100%, where 0% means that you are not willing to buy other products instead of US products and 100% means that you are very willing to buy other products instead.”
The survey question asked participants: “What is the main reason driving your willingness to buy other products instead of US products in the case of a trade tariff?” Respondents were instructed to select the primary reason influencing their decision among the following response options: (1) the potential price increase, (2) preference to switch away from US products, (3) lack of comparable alternatives, and (4) none of the above.
See Coibion, O., Gorodnichenko, Y. and Weber, M. (2025), “The Upcoming Trump Tariffs: What Americans Expect and How They Are Responding”, 17 January.
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European Commission | EU mobilises €910 million to boost European defence and close capability gaps
The strengthened cooperation between the Ukrainian and European defence industries, builds on outreach efforts by the EU Defence Innovation Office in Kyiv to foster closer ties and to further integrate Ukraine into the European defence industrial base, reinforcing shared security and innovation objectives.
These EDF investments will boost Europe’s defence industry, in line with the Commission’s ReArm Europe Plan/Readiness 2030 to strengthen pan-European defence capabilities, and the Joint White Paper on European Defence Readiness 2030, framing a new approach to defence and identifying investment needs
EDF 2024 call results
With a budget of €7.3 billion for 2021-2027, the EDF is the EU’s primary instrument to support defence R&D cooperation. It fosters collaboration among companies of all sizes and research institutions across the EU and Norway. Additionally, the EDF is driving the transformation and expansion of the EU defence ecosystem with the EU Defence Innovation Scheme (EUDIS) at its core.
A dedicated €45 million from this year’s investment supports disruptive technologies, designed to significantly alter or replace existing defence products, concepts and capabilities, often by introducing simplicity, convenience, accessibility, or cost-effectiveness. Nine of the selected projects aim at delivering disruptive technologies, such as project METASTEALTH, which is developing next-generation stealth materials.
Newly selected projects also include Ukraine’s Small UAS, which focuses on developing advanced, AI-driven aerial systems. Other examples include the ENGRTII project, which unites more than 45 industrial players and research organisations to develop the next generation European rotorcraft by 2030. Another project, EUROSWEEP, will create a common autonomous European minesweeping system.
The EDF also contributed for the first time to the objectives of the Strategic Technologies for Europe Platform (STEP), the Commission’s initiative to boost the development and manufacturing of critical technologies in the EU, with a total of 15 related call topics. All proposals that met the required quality standards under these calls have been awarded a STEP Seal, which helps attract further public and private funding. The full list of those projects will be published on the STEP Portal in the coming weeks.
Next Steps
Following the selection of the successful proposals, the Commission will now enter into the grant agreement preparation with the consortia, with the goal of signing agreements before the end of the year. The resulting projects will be instrumental in shaping the future of European defence, fostering a collaborative and innovative defence ecosystem, and enhancing the EU’s strategic capabilities over the next few years.
Background
The EDF provides support for the entire research and development cycle, focusing on projects that yield cutting-edge, interoperable defence technologies and equipment. The EDF also promotes innovation and encourages cross-border participation by small and medium-sized enterprises (SMEs). Project selection is based on calls for proposals that reflect the EU’s capability priorities, as agreed upon by Member States within the Common Security and Defence Policy (CSDP) framework and the Capability Development Plan (CDP).
The EDF is implemented through annual work programmes, structured around 17 thematic and horizontal categories of action during the 2021-2027 Multiannual Financial Framework period. These categories focus on:
Addressing emerging challenges, such as defence medical support, CBRN threats, biotech, and human factors, to create a holistic approach to the modern-day battlefield.
Developing boosters and enablers for defence, including digital transformation, energy resilience, and environmental transition, to drive key technological advancements across capability domains.
Enhancing excellence in warfare, with a focus on air combat, air and missile defence, ground combat, force protection, and mobility, as well as simulation and training, to support ambitious defence systems.
The fourth edition of the EDF calls has seen unprecedented interest from the EU defence industry and research organisations. It has attracted a record-number of 297 proposals, bringing together 625 legal entities from 26 EU Member States or Norway. This highlights the growing appetite for pan-European cooperation and joint strategic defence capability development. SMEs play a vital role in selected proposals, accounting for over 38% of all participating entities and receiving more than 27% of the total EU funding requested. In the selected projects, over €369 million are assigned to 39 research projects and €539 million to 23 capability development projects.
For more information, please contact:
Thomas Regnier, Spokesperson, EUROPEAN COMMISSION
Marine Strauss, Press Officer, EUROPEAN COMMISSION
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ECB | Study shows money market turnover rose from 2022 to 2024
Increased daily money market activity, dominated by secured and foreign exchange swap segments
High concentration in short-term tenors, with non-banks being most active counterparties
The European Central Bank (ECB) today published its Euro money market study 2024. The study shows that daily turnover in the euro money market grew by 38% to €1.8 trillion in the two years to the end of 2024, up from €1.3 trillion at the end of 2022. The reasons for this growth are mainly twofold: banks adapting to declining excess liquidity by trading more in money markets and changes to monetary policy rates that influenced the shape of the yield curve.
Secured and foreign exchange swap transactions accounted for more than half of total market turnover and outstanding amounts, with the overnight index swap segment showing the most significant growth.
The study also highlights that activity in both the secured and unsecured segments was particularly concentrated in very short-term tenors such as overnight, spot/next and tomorrow/next transactions.
As at the end of 2024, bilateral trading activity among euro area banks as a share of the total in each segment was modest with 17% for unsecured and 26% for foreign exchange swaps. Compared with the period from 2021 to 2022, secured trading with public institutions increased significantly to almost €70bn from €10bn following the reduction in the remuneration of non-monetary policy deposits that took effect as of 1 May 2023.
The study finds that the continuation of interest rate hikes by the ECB until September 2023 and the subsequent cuts starting in June 2024 were immediately and fully reflected in money market rates and that policy rate expectations triggered significant activity in the overnight index swap segment.
Money market rates converged towards the deposit facility rate – the interest rate through which the Governing Council of the ECB steers its monetary policy stance – albeit to different degrees. As a result, a persistent positive spread emerged between secured and unsecured overnight rates, as €STR showed low sensitivity to reductions in excess liquidity (see details in box 1).
The next euro money market study, set for publication in the second quarter of 2027, will broaden the scope of analysis to include trades from 69 banks compared with 45 banks in the 2024 study. This reflects the increase in the number of money market statistical reporting agents as announced in April 2023.
Notes
The ECB’s euro money market study is published every second year. The 2024 study provides a detailed overview of the euro money market in the period between January 2023 to December 2024. It focuses on key developments and dynamics in five euro money market segments: secured, unsecured, short-term securities, foreign exchange swaps and overnight index swaps.
The study is based on daily transactions in the euro money market collected from the largest euro area banks under Regulation (EU) No 1333/2014 of the European Central Bank of 26 November 2014 concerning statistics on the money markets (ECB/2014/48) (OJ L 359, 16.12.2014, p. 97) – the Money Market Statistical Reporting (MMSR) Regulation.
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OECD | Labour taxes edge up in the OECD as real wages recover in 2024
With inflation rates falling across the OECD, Taxing Wages 2025 reveals that the post-tax income of a single worker earning the average wage increased in real terms in 28 of the 38 OECD countries in 2024, having declined in 21 countries in 2023 and 33 countries in 2022.
The new OECD analysis provides cross-country comparison of the labour tax wedge, which measures total taxes on labour paid by both employees and employers, minus cash benefits received by working families, as a percentage of labour costs. The report looks at eight stylised household types, which vary by income level and household composition.
Effective tax rates for seven of these eight household types rose slightly on average across OECD countries in 2024; for each of the seven, the average tax wedge has now risen to its level in 2019, prior to the COVID-19 pandemic. In 2020, effective tax rates fell sharply due to falls in average wages and temporary measures introduced by OECD countries to support households during the pandemic.
Higher social security contributions were the most common factor behind the increases in the tax wedge in 2024. The increases were generally smaller in 2024 than in the previous two years, when high inflation had caused effective personal income tax rates to rise in the absence of automatic indexation of tax systems in many OECD countries.
In 2024, the tax wedge for a single worker earning the average wage increased in 20 countries and edged up by 0.05 percentage points (p.p.) on average across the OECD, reaching 34.9%. The tax wedge ranged from 52.6% in Belgium to 0% in Colombia, where workers earning the average wage do not pay income tax and make social security payments that are not classified as taxes.
For the second consecutive year, the only household type for which effective tax rates fell in 2024 was a single parent earning 67% of the average wage. For this household type, the tax wedge declined in 24 countries and fell by 0.38 p.p. on average across the OECD to 15.8% in 2024. The largest declines occurred in Portugal and Poland (of 7.2 p.p. and 4.1 p.p., respectively) and were partly due to increases in cash benefits.
This year’s edition of Taxing Wages contains a special feature that analyses the impact of tax credits and allowances on personal income tax rates in OECD countries. The analysis shows that credits and allowances significantly reduce tax rates across household types, especially for households with children. Credits and allowances also make personal income tax systems of OECD countries more progressive, with credits having a greater impact in this regard than allowances.
Further information and individual country notes are available at: https://www.oecd.org/en/publications/taxing-wages-2025_b3a95829-en.html.
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