Germany is facing a perilous watershed moment, warned Chancellor Friedrich Merz in a speech to parliament today. He vowed that his government will make the right choices to protect freedom, economic prosperity and social cohesion and set out priorities for the ruling coalition of his conservatives and the Social Democrats.
Merz is under increasing pressure to make good on a pledge to pull Germany out of its lingering economic stagnation and address challenges like high energy prices and tangled bureaucracy.
A massive increase in debt-financed spending on the armed forces and Germany’s decaying infrastructure, as well as a package of measures designed to boost short-term growth, are expected to underpin expansion next year.
Merz’s pledges have implications for Europe. Global investors have expressed doubt about a European equity rally as they wait for Merz to deliver. In an interview with Bloomberg, Goldman strategists Sharon Bell and Christian Mueller-Glissmann said money managers had voiced concern about Europe falling behind at a time when artificial intelligence is boosting US equities and China is outperforming in emerging markets.
Some investors have questioned when the promise of massive stimulus will translate into company profits. Critics also suggest that parts of the money might be used as a substitute for states’ budgets rather than fuel additional investment. — Jennifer Duggan
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European Union member states approved negotiations with Canada and the UK that would give them access to the bloc’s €150 billion ($178 billion) fund aimed at accelerating investment in the defense industry. If agreed, the accords would allow British and Canadian companies to participate in common procurements financed by SAFE, part of the EU’s effort to boost its defense readiness. Other non-EU states are also seeking to participate including Albania, Turkey and South Korea.
US President Donald Trump was welcomed today at Windsor Castle in the UK with a royal carriage ride as part of his state visit. The pageantry of his meeting with King Charles III is set against the backdrop of heightened global and domestic tensions. Tomorrow he will have a day of diplomatic meetings with Prime Minister Keir Starmer, in which the UK hopes to press Trump on trade terms and the war in Ukraine, though major breakthroughs are not expected.
King Charles walks with US President Trump in Windsor. Photographer: JONATHAN BRADY/AFP
There is growing momentum in Europe to expand the use of frozen Russian assets to finance Ukraine. European governments and their allies in the Group of Seven are looking at ways to make further use of the immobilized assets to generate additional revenue to support Kyiv’s defense against Moscow’s war, according to people familiar. The topic is expected to be raised by some EU finance ministers at a meeting in Copenhagen this week and among the EU leaders in October and a decision could be finalized at the Oct. 23-24 EU leaders’ summit.
Abu Dhabi National Oil dropped its planned $19 billion takeover of Australian natural gas producer Santos, walking away from an ambitious effort to expand overseas after failing to agree on key terms. A “combination of factors” discouraged the company’s XRG unit from making a final bid, it said today. It’s a notable retreat for XRG, the Adnoc spinoff launched to great fanfare last year and tasked with deploying Abu Dhabi’s billions into international dealmaking.
Manchester United, the Premier League’s fallen giant, is struggling to keep tabs with its larger rivals after revenues flat-lined and losses continued to mount. The club announced revenues of £666.5 million for the year ending June 2025, and losses of £33.0 million, barely ahead of last year’s £661.7 million. Shares fell as much as 8% in early trading in New York. The results highlight how the club has been adversely affected by its continued slump in performance on the field, and increases fears that the famous brand is struggling to make up the shortfall.
The EU proposed suspending Israel’s preferential trade benefits as part of a new package of sanctions in response to the deteriorating humanitarian situation in Gaza. The European Commission proposed today to suspend part of its association agreement with Israel, which means the country will be charged the same tariff rate as other nations that don’t have a trade accord with the bloc. The EU is Israel’s largest trading partner.
Palestinians flee northern Gaza along the coastal road on Sept. 16. Photographer: Abdel Kareem Hana/AP Photo
Alarm firm Verisure is planning to raise about €3.1 billion via an initial public offering in Stockholm, it would be Europe’s largest such deal in three years. The proceeds will be used to pay down debt and finance an acquisition, according to a statement. The offering would consist of new shares and €235 million will be raised from two existing investors. The listing will happen in the next few weeks, Chief Executive Officer Austin Lally said in an interview with Bloomberg TV.
