1. The Art of the Standoff
Following his televised dispute with Ukrainian President Volodymyr Zelenskyy in the Oval Office, President Trump’s decision to halt military aid to Ukraine sparked international concern, adding a new layer of complexity to the ongoing Russia-Ukraine conflict. The move, aimed at pressuring Kyiv into negotiations, sparked outrage among NATO allies and raised questions about the US’s commitment to countering Russia’s aggression. However, Trump claims that Ukraine’s acceptance of a proposed 30-day ceasefire will lead to the restoration of military aid and intelligence-sharing, signalling a potential shift in the conflict’s trajectory. The focus now turns to whether Russia will agree to the ceasefire, which could pave the way for broader peace talks.
Simultaneously, Trump doubled down on his tariff crusade, imposing fresh duties on Canada, Mexico, and China - prompting swift responses from Canada and China who announced retaliatory tariffs, whereas Mexico said it had ‘contingency plans’ to combat the measures. Trump also stated 25% tariffs on the EU will be announced soon, with global stock markets falling amid fears of an escalating trade war.
2. UK Running Hot
The UK’s February CPI reading sparked a strong market reaction, as inflation accelerated to 3%, above the forecasts of 2.8%. The unexpected data has cooled hopes for interest rate cuts this year, with Bank of England officials adopting a more hawkish tone. With consumer confidence fragile and the broader economy showing signs of strain, Chancellor Rachel Reeves faces mounting pressure to deliver fiscal measures that can support growth without fuelling further inflation. As rate cut expectations dwindle, the UK's economic path forward appears increasingly narrow.
3. Germany's Rightward Swing
Germany’s snap election delivered a seismic shift, with the centre-right CDU/CSU alliance, led by Friedrich Merz, clinching 28.6% of the vote - enough to claim victory but shy of the majority some had anticipated. The far-right AfD surged to a historic 20.8%, doubling its 2021 haul and cementing its foothold in the east, where it dominated constituencies. The SPD, under outgoing Chancellor Olaf Scholz, cratered to 16.4% - its worst showing in over a century - while the Greens slipped to 11.6%.
With coalition negotiations likely to stretch on due to the refusal of all other political parties to form a coalition with CDU/CSU, we watch closely to see how a new government will navigate Europe’s largest economy through a challenging year. Voters have rejected the old guard but left the path forward murky.