The European Central Bank held its key deposit rate at 2 percent for a fifth consecutive meeting on Thursday, as policymakers weighed fresh geopolitical shocks and a stronger euro that could complicate the inflation outlook for the eurozone. The ECB said that its updated assessment “reconfirms that inflation should stabilize at its 2 percent target in the medium term” and that the “economy remains resilient.” At the same time, the central bank warned that “the outlook is still uncertain, owing particularly to ongoing global trade policy uncertainty and geopolitical tensions.” Since the ECB last met in December, global risks have intensified. U.S. President Donald Trump threatened new tariffs — or worse — to secure control over Greenland and launched his most aggressive attack yet of the U.S. Federal Reserve, triggering a broad sell-off in the dollar. That pushed the euro briefly to its highest level since 2021, raising concerns among some ECB policymakers that currency strength could drag inflation further below the ECB’s 2 percent target. While data released early this week showed inflation sinking to 1.7 percent in January, the most recent ECB staff forecasts see it returning to target by 2028. A continued appreciation of the euro, however, risks pushing inflation below target more durably and may thus require ECB action, French central bank chief François Villeroy de Galhau has warned. The euro has eased from its $1.20 peak to around $1.1780 as of Thursday, tempering immediate concerns. But analysts said exchange-rate volatility is likely to remain elevated, with investors watching ECB President Christine Lagarde’s 2:45 p.m. CET press conference for clues on how policymakers are reassessing risks — and the outlook for rates.

LONDON — Victory is finally in sight for the Bank of England. But rate cuts aren’t. It’s taken Britain’s central bank longer to bring inflation under control than any of its peers on the global stage, but on Thursday economists expect forecasts to show that inflation in the U.K. will return to the government’s 2 percent target within the next two years, having overshot it for almost all of the last four. The pound surged to its highest level against the dollar in five years last month, as global confidence in the anchor of the world’s financial system appeared to fray due to the news flow out of the U.S. But there will be little else to set the pulse racing: Financial market participants are almost unanimous in expecting no change in the Bank rate from its current 3.75 percent. Even the extraordinary events of January, which saw the U.S. seize Venezuelan leader Nicolas Maduro and U.S. President Donald Trump threaten military force against his NATO allies over Greenland, seem unlikely to induce a shift in the Bank’s communication about the U.K.’s economic outlook. Extrapolating how these seismic events will translate into the U.K. economy has been hard. One of the more hawkish members of the Bank’s Monetary Policy Committee, Megan Greene, argued in a speech last month that while a stronger pound should help keep the cost of imports down, it could easily be offset by other factors, especially if the U.S. Federal Reserve were to be pressured by the White House into cutting U.S. interest rates more aggressively. Greene argued the MPC should focus on what is in its power to control. Here, the Bank is facing a familiar conundrum: growth is sluggish and unemployment is trending higher, but inflation is coming down — even if painfully slowly — and most business surveys suggest wage growth will continue to outstrip what is justified by productivity. Headline inflation ticked up again in December to 3.4 percent, still far above the 2 percent target. The latest data suggest that the economy is still more or less ticking along, growing at an annual rate of 1.4 percent in the three months through November. STILL ‘GRADUAL AND CAUTIOUS’ The narrow vote by the MPC to cut the Bank rate to 3.75 percent from 4 percent at its last meeting in December — and the unwavering message from the Bank that it will take a “gradual and cautious” approach to easing policy — means the committee will stay put on Thursday, according to Deutsche Bank economist Sanjay Raja. UBS economist Anna Titareva, meanwhile, reckons the vote will be split, with both Governor Andrew Bailey and Deputy Governor Sarah Breeden capable of voting again for a cut alongside Alan Taylor and Swati Dhingra, the two external members most concerned about the risks of a slowdown and an accompanying rise in joblessness. But that scenario would still leave Bailey in the minority against the remaining five of nine members in the committee. Most analysts still expect the Bank to cut interest rates twice this year. Inflation is set to fall from April as Chancellor Rachel Reeves’ decision to strip green levies off energy bills causes a drop in final prices for electricity. Deutsche’s Raja expects cuts in March and again in June, but says rates are unlikely to fall any further after that.

The UK has historically been a global leader in life sciences innovation, but recent statistics paint a worrying picture for medicines access. The right policy can start to reverse this. We are living in a time where the intersection between breakthrough science, technology and data insights has the potential to transform treatment options for some of the toughest health conditions faced by patients in the UK. The UK has long played a central role in driving innovation when it comes to healthcare, and at Johnson & Johnson (J&J) we were pleased to see some positive signs from the Government at the end of 2025, illustrating an intent to reverse a decade of decline of investment in how the UK values innovative treatments. It was a positive first step, but now the real work begins to enable us to deliver the best possible outcomes for UK patients. To achieve this, our focus must be on ensuring our health system is set up to match the pace and gain the benefits of innovation that science provides. We need a supportive medicines environment that fully fosters growth, because even the most pioneering drugs and therapies are only valuable if they can be accessed by patients when they need them most. > even the most pioneering drugs and therapies are only valuable if they can be > accessed by patients when they need them most. At J&J, we are proud to have been part of the UK’s health innovation story for more than a century. We believe that turning ambition into delivery requires a clearer focus on the foundations that enable innovation to reach patients. We have had a substantial and long-term economic presence, with our expertise serving as the grounds for successful partnerships with patients, healthcare providers, clinical researchers and the NHS. Recent national developments are a step in the right direction The UK Government’s recent announcements on the life sciences industry are an important move to help address concerns around medicines access, innovation and the UK’s international standing. This includes a welcome planned increase to the baseline cost-effectiveness threshold (the first change to be made since its introduction in the early 2000s). While it is crucial to get this implemented properly, this seems like a step in the right direction — providing a starting point towards meaningful policy reform, industry partnership and progress for patients. The true impact of stifling medicine innovation in the UK compared with our peers These positive developments come at a critical time, but they do not fix everything. Over the past decade, spending on branded medicines has fallen in real terms, even as the NHS budget has grown by a third.[i] Years of cost-containment have left the UK health system ill-prepared for the health challenges of today, with short-term savings creating long-term consequences. Right now, access to innovative medicines in the UK lags behind almost every major European country[ii]; the UK ranks 16th and 18th among 19 comparable countries for preventable and treatable causes of mortality.[iii]These are conditions for which effective medicines already exist. Even when new medicines are approved, access is often restricted. One year after launch, usage of innovative treatments in England is just over half the average of comparator countries such as France, Germany and Spain.[iv] The effect is that people living with cancer, autoimmune conditions and rare diseases wait longer to access therapies that are already transforming lives elsewhere in Europe. And even at its new level, the UK’s Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) clawback rate remains higher than in comparable countries.[v] J&J is committed to working together to develop a new pricing and access framework that is stable, predictable and internationally competitive — enabling the UK to regain its position as a leading destination for life sciences. Seeing the value of health and medicines investment as a catalyst for prosperity and growth Timely access to the right treatment achieves two things; it keeps people healthy and prevents disease worsening so they can participate in society and a thriving economy. New research from the WifOR Institute, funded by J&J, shows that countries that allocate more resources to health — especially when combined with a skilled workforce and strong infrastructure — consistently achieve better outcomes.[vi] > Timely access to the right treatment achieves two things; it keeps people > healthy and prevents disease worsening so they can participate in society and > a thriving economy. The UK Government’s recent recognition of the need for long-term change, setting out plans to increase investment in new medicines from 0.3 percent of GDP to 0.6 percent over the next 10 years is positive. It signals a move towards seeing health as one of our smartest long-term investments, underpinning the UK’s international competitiveness by beginning to bring us nearer to the levels in other major European countries. This mindset shift is critical to getting medicines to patients, and the life sciences ecosystem, including the pharmaceutical sector as a cornerstone, plays a pivotal role. It operates as a virtuous cycle — driven by the generation, production, investment in, access to and uptake of innovation. Exciting scientific developments and evolving treatment pathways mean that we have an opportunity to review the structures around medicines reimbursement to ensure they remain sustainable, competitive and responsive. At J&J, we have the knowledge and heritage to work hand-in-hand with the Government and all partners to achieve this. Together, we can realise the potential of medicine innovation in the UK Patients have the right to expect that science and innovation will reach them when they need it. Innovative treatments can be transformative for patients, meaning an improved quality of life or more precious time with loved ones. We fully support the Government’s ambitions for life sciences and the health of the nation. Now is the moment to deliver meaningful change — the NHS, Government and all system partners, including J&J, must look at what valuing innovation actually means when it comes to modernising the frameworks and mechanisms that support access and uptake. Practical ways to do this include: * Establishing a new pricing and access framework that is stable, predictable and internationally competitive. * Evolving medicines appraisal methods and processes, to deliver on the commitments of the UK-US Economic Prosperity Deal. * Adapting thresholds and value frameworks to ensure they are fit for the future — in the context of wider system pressures, including inflation, and the evolution of medical innovation requiring new approaches to assessment and access. > the NHS, Government and all system partners, including J&J, must look at what > valuing innovation actually means when it comes to modernising the frameworks > and mechanisms that support access and uptake. By truly recognising the value of health as an investment, rather than as a cost, we can return the UK to a more competitive position. The direction of travel is positive. At J&J, we stand ready to work in partnership to help ensure the UK is once again the best place in the world to research, develop and access medicines. Follow Johnson & Johnson Innovative Medicine UK on LinkedIn for updates on our business, our people and our community. CP-562703 | January 2026 -------------------------------------------------------------------------------- [i] House of Commons Library (2026). ‘NHS Funding and Expenditure’ Research Briefing. Available at: https://commonslibrary.parliament.uk/research-briefings/sn00724/ (Accessed January 2026). [ii] IQVIA & EFPIA (2025). EFPIA Patients W.A.I.T Indicator 2024 Survey. Available at: https://efpia.eu/media/oeganukm/efpia-patients-wait-indicator-2024-final-110425.pdf. (Accessed January 2026) [iii] The Kings Fund (2022). ‘How does the NHS compare to the health care systems of other countries?’ Available at: https://www.kingsfund.org.uk/insight-and-analysis/reports/nhs-compare-health-care-systems-other-countries (Accessed January 2026) [iv] Office for Life Sciences (2024). Life sciences competitiveness indicators 2024: summary. Available at: https://www.gov.uk/government/publications/life-sciences-sector-data-2024/life-sciences-competitiveness-indicators-2024-summary (Accessed January 2026). [v] ABPI. VPAG payment rate for newer medicines will be 14.5% in 2026. December 2025. Available at: https://www.abpi.org.uk/media/news/2025/december/vpag-payment-rate-for-newer-medicines-will-be-145-in-2026/. (Accessed January 2026). [vi] WifOR Institute (2025). Healthy Returns: A Catalyst for Economic Growth and Resilience. Available at: https://www.wifor.com/en/download/healthy-returns-a-catalyst-for-economic-growth-and-resilience/?wpdmdl=360794&refresh=6942abe7a7f511765977063. (Accessed January 2026).

The eurozone economy held up well at the end of 2025, with three of the region’s four largest countries growing by more than expected. Preliminary data from the EU’s statistical office, Eurostat, on Friday showed that the eurozone’s economy expanded by 0.3 percent during the last three months of last year, unchanged from the third quarter. That was better than market expectations of an increase of 0.2 percent. In year-on-year terms, gross domestic product growth slowed by less than feared, to 1.3 percent from 1.4 percent in the previous quarter. GDP was up 0.3 percent in Germany, the region’s biggest economy, and by 0.4 percent and 0.8 percent in Italy and Spain, respectively. The standout underperformer was France, where it was stagnant, held back by a political deadlock that delayed the approval of a budget for 2026. Eurostat’s numbers still showed the scars of the U.S.-driven trade war that overshadowed the economy all through last year. Ireland, whose GDP figures are heavily influenced by trade and financial flows between it and the U.S., registered a sharp contraction of 0.6 percent in the final three months of the year. Eurostat gave no analysis of its numbers, but the figures were likely supported by the fall in global energy prices toward the end of last year. This typically helps European spending power, given that Europe is a net importer of energy.

The U.K. and China have announced a new services partnership to support British businesses operating in China, including through visa-free travel for short stays. The partnership will see Beijing relax its visa rules for British citizens, adding the U.K. to its visa-free list of countries. This will enable visits of up to 30 days for business and tourism without the need for a visa. The timings of the visa change have not yet been set out. The partnership focuses on better collaboration for businesses in healthcare, financial and professional services, legal services, education and skills — areas where British firms often face regulatory or administrative hurdles.  Britain and China have also agreed to conduct a “feasibility study” to explore whether to enter negotiations towards a bilateral services agreement. If it proceeds, this would establish clear and legally binding rules for U.K. firms doing business in China. Prime Minister Keir Starmer said: “As one of the world’s economic powerhouses, businesses have been crying out for ways to grow their footprints in China. “We’ll make it easier for them to do so – including via relaxed visa rules for short-term travel — supporting them to expand abroad, all while boosting growth and jobs at home.” The U.K. and China have also signed pacts covering co-operation on conformity assessments for exports from the U.K. to China, food safety, animal, and plant quarantine health and the work the UK-China Joint Economic and Trade Commission. The two sides aren’t planning to publish the full texts of the pacts.

BERLIN — German Chancellor Friedrich Merz warned that Europe will not withstand a new era of rising great-power imperialism unless it embraces the logic of hard power. “We will only be able to implement our ideas in the world, at least in part, if we ourselves learn to speak the language of power politics, if we ourselves become a European power,” Merz said Thursday during a speech in Germany’s federal parliament. Merz’s comments build on a speech the chancellor gave last week at the World Economic Forum in Davos in which he warned of a “radically changing” U.S. and “a new world of great powers being built on power, on strength, and when it comes to it, on force.” Merz said Thursday that Europe must embrace the logic of hard military and economic power in order to preserve Europe as a force for democracy in the world. “We are, in fact, a normative alternative to imperialism and autocracy in the world,” Merz said. “We have something to offer our partners around the world, both economically and, above all, in terms of our ideals.” Merz also joined other European leaders in condemning U.S. President Donald Trump’s comment last week that NATO allies had stayed “a little off the front lines” during the war in Afghanistan, a statement that sparked outrage in Europe’s capitals. During the nearly 20-year mission in Afghanistan, launched in response to the September 11 attacks on the U.S., 59 German soldiers lost their lives. “We will not allow this mission, which we also carried out in the interests of our ally, the United States of America, to be disparaged and belittled today,” Merz said to sustained applause. “I would like to say once again to our soldiers on duty and at their bases today that your service was and is valuable.” Given Germany’s ongoing dependence on U.S. military power for its own defense, Merz has been reluctant to openly criticize Trump even as he warns that Europe must prepare to go it alone as the U.S.-led global order crumbles. On Thursday, he urged the German public and European allies to seek to preserve the alliance with the U.S. to the degree possible. “We should not recklessly jeopardize established alliances,” Merz said. “The transatlantic alliance and transatlantic trust are still valuable in their own right today. For us in Germany, this is particularly true.” At the same time, Merz is pushing to make Germany more militarily independent of the U.S. Shortly after becoming chancellor last May, Merz vowed to take more responsibility for Europe’s defense by building the strongest conventional army in Europe.

BEIJING — Dialogue between the U.K. and China is essential for “world peace,” Chinese President Xi Jinping told Keir Starmer Thursday, heaping praise on Britain’s center-left prime minister as the two men marked a thawing of their relationship. The U.K. prime minister said he wanted “more sophisticated” ties with the world’s second-largest economy, during a visit where he is seeking growth for the British economy and co-operation on issues such as climate change. It is the first visit by a U.K. prime minister to China for eight years, which has proven controversial in Britain due to concerns over Beijing’s human rights record, economic imbalances and accusations of cyber sabotage in Britain by Chinese entities. But in remarks at the start of their meeting in Beijing’s Great Hall of the People, both men avoided difficult issues and heaped praise on each other’s countries. After years of chilled relations under Conservative U.K. governments, Starmer said: “China is a vital player on the global stage and it is vital to build a more sophisticated relationship, where we can identify opportunities to collaborate, but also to allow meaningful dialogue on areas where we disagree.” Communist leader Xi, speaking through an interpreter, singled out Britain’s Labour Party, saying it had in the past “made important contributions to the growth of China-U.K. relations.” He added that there had been “twists and turns that did not serve the interests of our countries” in recent years. Describing the state of the world as “turbulent and fluid,” Xi said more dialogue between the two nations was “imperative,” whether “for the sake of world peace and stability or for our two countries’ economies and peoples.” He added the two men would “stand the test of history” if they could rise above their differences. Acknowledging the furor over China in the U.K., Xi said: “Your visit this time has drawn a lot of attention. Sometimes good things take time. “As long as it is the right thing that serves the fundamental interests of the country and the people, then as leaders we should not shy away from difficulties.” Starmer has tried to take a more measured approach than Canadian Prime Minister Mark Carney, who warned the world order was fractured after his recent trip to Beijing and was later threatened with tariffs by U.S. President Donald Trump. Starmer has insisted he can pursue trade with the U.S., EU and China at the same time in a way that protects national security. The U.K. prime minister said he wanted to focus on “global stability and security, growth and shared challenges like climate change.” Starmer did not raise specific human rights concerns or policy detail during his brief on-camera remarks, though he did make reference to having “meaningful dialogue” on areas where the countries disagree. Ahead of the meeting, Starmer declined to say whether he would raise Russia’s war in Ukraine with Xi, or whether he would ask the Chinese leader to put pressure on Russian President Vladimir Putin to end the fighting. China and the U.K. are due to sign a series of deals later on Thursday. They are expected to cover areas including visa-free travel and mutual recognition of professional qualifications, but collaboration on deeper technology including wind farms appeared less likely.

LONDON —  Keir Starmer lands in China trying to do everything at once. As his government searches desperately for economic growth, the prime minister’s policy is to cooperate, compete with, and, where appropriate, challenge the Asian superpower. That’s easier said than done. POLITICO asked five China analysts — ranging from former government ministers to ex-diplomats — to give their honest take on how the British PM should handle the days ahead. DON’T LECTURE — VINCE CABLE, FORMER BUSINESS SECRETARY Vince Cable, who visited China three times as U.K. business secretary between 2010 and 2015, says Starmer must not give Chinese President Xi Jinping public lectures. It will be tempting, given China’s human rights record. U.K. lawmakers are particularly concerned about Beijing’s treatment of Uyghur Muslims and Hong Kongers. “From experience, that just antagonizes people. They’ll respond in kind and will remind us about all the bad things the British have done throughout our history. You’ll get absolutely nowhere,” Cable, a former Liberal Democrat leader who wrote “The Chinese Conundrum: Engagement or Conflict” after leaving office, said.  Raising concerns in private is more likely to get a positive result, he thinks. “Although I’m by no means an admirer of President [Donald] Trump … his approach, which is business-like and uses actually quite respectful language in public, has actually had far more success in dealing with the Chinese than the traditional missionary approach of some Western European countries,” Cable adds.  LISTEN AND SPEAK UP — BEN BLAND, CHATHAM HOUSE ASIA-PACIFIC PROGRAM DIRECTOR Ben Bland, director of the Chatham House think tank’s Asia-Pacific program, warns there can’t be a return to the “naive optimism” of the “golden era” under Cameron. Britain should “listen to the Chinese leadership and try and understand more about how [Chinese President] Xi Jinping and other senior communist leaders see the world, how they see China,” the former Financial Times South China correspondent says. “The U.K.’s ability to influence China directly is quite limited, but it’s really important that we understand what they’re trying to do in the world.” Starmer should be clear about the U.K.’s red lines on espionage, interference in British society, and the harassment of people living in this country, Bland says. Vince Cable, who visited China three times as U.K. business secretary between 2010 and 2015, says Starmer must not give Chinese President Xi Jinping public lectures. | Andy Rain/EPA TREAT TRADE CAUTIOUSLY — CHARLES PARTON, FORMER DIPLOMAT “The Chinese are adept at the propaganda of these visits, and ensuring that everything seems wonderful,” Charles Parton, an ex-diplomat who was First Counsellor to the EU Delegation in Beijing between 2011 and 2016, warns.   “There’s an awful lot of strange counting going on of [investment] deals that have already been signed, deals that are on the cards to be signed [and] deals that are glimmers in the eye and almost certainly won’t be signed,” Parton, now an adviser to the Council on Geostrategy think tank, says. “Trade is highly fungible. It’s not political,” Parton, who is also a senior associate at the Royal United Services Institute, adds. “We shouldn’t be saying to ourselves ‘oh my gosh, we better knuckle down to whatever the Chinese want of us, because otherwise our trade and investment will suffer’,” he believes. “If you can push through trade investment which is beneficial — excellent. That’s great, but let’s not think that this is the be-all and end-all,” he warns. SEE CHINA AS IT IS — LUKE DE PULFORD, INTER-PARLIAMENTARY ALLIANCE ON CHINA EXECUTIVE DIRECTOR  Luke De Pulford, executive director of the hawkish global cross-party Inter-Parliamentary Alliance on China, is skeptical about the timing of Starmer’s China trip —  a week after ministers gave planning approval for Beijing’s controversial mega embassy in London. “Going to China against that backdrop, to look as if you’re going to make national security concessions in the hope of economic preferment, is unwise,” he says. He is also doubtful that closer ties with Beijing will improve the British economy. “All of the evidence seems to point towards China investing in the U.K. only in as far as it suits their strategic interests,” De Pulford says. “There’s a lot to lose and not very much to gain.”  Prioritizing the U.K. agenda will be paramount for Starmer. “There’s nothing wrong at all with visiting China if you’re going to represent your interests and the United Kingdom’s interests,” he says, while remaining doubtful that this will be achieved. SET OUT A CHINA STRATEGY — EVIE ASPINALL, BRITISH FOREIGN POLICY GROUP DIRECTOR  Securing a “symbolic, long-term relationship” with China should be a priority for Starmer, Evie Aspinall, who leads the non-partisan British Foreign Policy Group think tank, says. She wants the U.K.’s China Audit to be published in full, warning businesses “don’t have a strong understanding of what the U.K.’s approach is.”  The audit was launched in late 2024 to allow the government to understand Beijing’s threats and opportunities, but its findings have not been published in detail because much of its content is classified. “I think that’s a fundamental limitation,” Aspinall says, pointing out it is businesses which will generate the growth Starmer wants.  U.K. businesses need to know they “will be supported around some of those risks if they do decide to engage more closely with China,” she says.   

LONDON — Canadian Prime Minister Mark Carney left Beijing and promptly declared the U.S.-led “world order” broken. Don’t expect his British counterpart to do the same. Keir Starmer will land in the Chinese capital Wednesday for the first visit by a U.K. prime minister since 2018. By meeting President Xi Jinping, he will end what he has called an “ice age” under the previous Conservative administration, and try to win deals that he can sell to voters as a boost to Britain’s sputtering economy. Starmer is one of a queue of leaders flocking to the world’s second-largest economy, including France’s Emmanuel Macron in December and Germany’s Friedrich Merz next month. Like Carney did in Davos last week, the British PM has warned the world is the most unstable it has been for a generation. Yet unlike Carney, Starmer is desperate not to paint this as a rupture from the U.S. — and to avoid the criticism Trump unleashed on Carney in recent days over his dealings with China. The U.K. PM is trying to ride three horses at once, staying friendly — or at least engaging — with Washington D.C., Brussels and Beijing.  It is his “three-body problem,” joked a senior Westminster figure who has long worked on British-China relations. POLITICO spoke to 22 current and former officials, MPs, diplomats, industry figures and China experts, most of whom were granted anonymity to speak frankly. They painted a picture of a leader walking the same tightrope he always has surrounded by grim choices — from tricky post-Brexit negotiations with the EU, to Donald Trump taking potshots at British policies and freezing talks on a U.K.-U.S. tech deal. Starmer wants his (long-planned) visit to China to secure growth, but be cautious enough not to compromise national security or enrage Trump. He appears neither to have ramped up engagement with Beijing in response to Trump, nor reduced it amid criticism of China’s espionage and human rights record. In short, he doesn’t want any drama. “Starmer is more managerial. He wants to keep the U.K.’s relationships with big powers steady,” said one person familiar with planning for the trip. “You can’t really imagine him doing a Carney or a Macron and using the trip to set out a big geopolitical vision.” An official in 10 Downing Street added: “He’s clear that it is in the U.K.’s interests to have a relationship with the world’s second biggest economy. While the U.S. is our closest ally, he rejects the suggestion that means you can’t have pragmatic dealings with China.” He will be hoping Trump — whose own China visit is planned for April — sees it that way too. BRING OUT THE CAVALRY Starmer has one word in his mind for this trip — growth, which was just 0.1 percent in the three months to September. The prime minister will be flanked by executives from City giants HSBC, Standard Chartered, Schroders and the London Stock Exchange Group; pharmaceutical company AstraZeneca; car manufacturer Jaguar Land Rover; energy provider Octopus; and Brompton, the folding bicycle manufacturer. The priority in Downing Street will be bringing back “a sellable headline,” said the person familiar with trip planning quoted above. The economy is the overwhelming focus. While officials discussed trying to secure a political win, such as China lifting sanctions it imposed on British parliamentarians in 2021, one U.K. official said they now believe this to be unlikely. Between them, five people familiar with the trip’s planning predicted a large number of deals, dialogues and memorandums of understanding — but largely in areas with the fewest national security concerns. These are likely to include joint work on medical, health and life sciences, cooperation on climate science, and work to highlight Mandarin language schemes, the people said.  Officials are also working on the mutual recognition of professional qualifications and visa-free travel for short stays, while firms have been pushing for more expansive banking and insurance licences for British companies operating in China. The U.K. is meanwhile likely to try to persuade Beijing to lower import tariffs on Scotch whisky, which doubled in February 2025. A former U.K. official who was involved in Britain’s last prime ministerial visit to China, by Theresa May in 2018, predicted all deals will already be “either 100 or 99 percent agreed, in the system, and No. 10 will already have a firm number in its head that it can announce.” THREADING THE NEEDLE Yet all five people agreed there is unlikely to be a deal on heavy energy infrastructure, including wind turbine technology, that could leave Britain vulnerable to China. The U.K. has still not decided whether to let Ming Yang, a Chinese firm, invest £1.5 billion in a wind farm off the coast of Scotland. And while Carney agreed to ease tariffs on Chinese electric vehicles (EVs), three of the five people familiar with the trip’s planning said that any deep co-operation on EV technology is likely to be off the table. One of them predicted: “This won’t be another Canada moment. I don’t see us opening the floodgates on EVs.” Britain is trying to stick to “amber and green areas” for any deals, said the first person familiar with the planning. The second of the five people said: “I think they‘re going for the soft, slightly lovey stuff.” Britain has good reason to be reluctant, as Chinese-affiliated groups have long been accused of hacking and espionage, including against MPs and Britain’s Electoral Commission. Westminster was gripped by headlines in December about a collapsed case against two men who had been accused of spying for China. Chinese firm Huawei was banned from helping build the U.K.’s 5G phone network in 2020 after pressure from Trump. Even now, Britain’s security agencies are working on mitigations to telecommunications cables near the Tower of London. They pass close to the boundary of China’s proposed embassy, which won planning approval last week. Andrew Small, director of the Asia Programme at the European Council on Foreign Relations, a think tank working on foreign and security policy, said: “The current debate about how to ‘safely’ increase China’s role in U.K. green energy supplies — especially through wind power — has serious echoes of 5G all over again, and is a bigger concern on the U.S. side than the embassy decision.”  Starmer and his team also “don’t want to antagonize the Americans” ahead of Trump’s own visit in April, said the third of the five people familiar with trip planning. “They’re on eggshells … if they announce a new dialogue on United Nations policy or whatever bullshit they can come up with, any of those could be interpreted as a broadside to the Trump administration.” All these factors mean Starmer’s path to a “win” is narrow. Tahlia Peterson, a fellow working on China at Chatham House, the international affairs think tank, said: “Starmer isn’t going to ‘reset’ the relationship in one visit or unlock large-scale Chinese investment into Britain’s core infrastructure.” Small said foreign firms are being squeezed out of the Chinese market and Xi is “weaponizing” the dependency on Chinese supply chains. He added: “Beijing will likely offer extremely minor concessions in areas such as financial services, [amounting to] no more than a rounding error in economic scale.” Chancellor Rachel Reeves knows the pain of this. Britain’s top finance minister was mocked when she returned with just £600 million of agreements from her visit to China a year ago. One former Tory minister said the figure was a “deliberate insult” by China. Even once the big win is in the bag, there is the danger of it falling apart on arrival. Carney announced Canada and China would expand visa-free travel, only for Beijing’s ambassador to Ottawa to say that the move was not yet official. Despite this, businesses have been keen on Starmer’s re-engagement.  Rain Newton-Smith, director-general of the Confederation of British Industry, said firms are concerned about the dependence on Chinese rare earths but added: “If you map supply chains from anywhere, the idea that you can decouple from China is impossible. It’s about how that trade can be facilitated in the best way.” EMBASSY ROW Even if Starmer gets his wins, this visit will bring controversies that (critics say) show the asymmetry in Britain’s relationship with China. A tale of two embassies serves as a good metaphor.  Britain finally approved plans last week for China’s new outpost in London, despite a long row over national security. China held off formally confirming Starmer’s visit until the London embassy decision was finalized, the first person familiar with planning for the trip said. (Others point out Starmer would not want to go until the issue was resolved.) The result was a scramble in which executives were only formally invited a week before take-off. And Britain has not yet received approval to renovate its own embassy in Beijing. Officials privately refer to the building as “falling down,” while one person who has visited said construction materials were piled up against walls. It is “crumbling,” added another U.K. official: “The walls have got cracks on them, the wallpaper’s peeling off, it’s got damp patches.” British officials refused to give any impression of a “quid pro quo” for the two projects under the U.K.’s semi-judicial planning system. But that means much of Whitehall still does not know if Britain’s embassy revamp in Beijing will be approved, or held back until China’s project in London undergoes a further review in the courts. U.K. officials are privately pressing their Chinese counterparts to give the green light. One of the people keenest on a breakthrough will be Britain’s new ambassador to Beijing Peter Wilson, a career diplomat described by people who have met him as “outstanding,” “super smart” and “very friendly.”  For Wilson, hosting Starmer will be one of his trickiest jobs yet. The everyday precautions when doing business in China have made preparations for this trip more intense. Government officials and corporate executives are bringing secure devices and will have been briefed on the risk of eavesdropping and honeytraps. One member of Theresa May’s 2018 delegation to China recalled opening the door of what they thought was their vehicle, only to see several people with headsets on, listening carefully and typing. They compared it to a scene in a spy film. Activists and MPs will put Starmer under pressure to raise human rights issues — including what campaigners say is a genocide against the Uyghur people in Xinjiang province — on a trip governed by strict protocol where one stray word can derail a deal.  Pro-democracy publisher Jimmy Lai, who has British nationality, is facing sentencing in Hong Kong imminently for national security offenses. During the PM’s last meeting with Xi in 2024, Chinese officials bundled British journalists out of the room when he raised the case. Campaigners had thought Lai’s sentencing could take place this week. All these factors mean tension in the British state — which has faced a tussle between “securocrats” and departments pushing for growth — has been high ahead of the trip. Government comments on China are workshopped carefully before publication. Earlier this month, Foreign Secretary Yvette Cooper told POLITICO her work on Beijing involves looking at “transnational repression” and “espionage threats.” But when Chancellor Rachel Reeves met China’s Finance Minister He Lifeng in Davos last week to tee up Starmer’s visit, the U.K. Treasury did not publicize the meeting — beyond a little-noticed photo on its Flickr account. SLOW BOAT TO CHINA Whatever the controversies, Labour’s China stance has been steadily taking shape since before Starmer took office in 2024. Labour drew inspiration from its sister party in Australia and the U.S. Democrats, both of which had regular meetings with Beijing. Party aides argued that after a brief “golden era” under Conservative PM David Cameron, Britain engaged less with China than with the Soviet Union during the Cold War. The result of Labour’s thinking was the policy of “three Cs” — “challenge, compete, and cooperate.” A procession of visits to Beijing followed, most notably Reeves last year, culminating in Starmer’s trip. His National Security Adviser Jonathan Powell was involved in planning across much of 2025, even travelling to meet China’s top diplomat, Wang Yi, in November. Starmer teed up this week’s visit with a December speech arguing the “binary” view of China had persisted for too long. He promised to engage with Beijing carefully while taking a “more transactional approach to pretty well everything.”  The result was that this visit has long been locked in; just as Labour aides argue the London embassy decision was set in train in 2018, when the Tory government gave diplomatic consent for the site. Labour ministers “just want to normalize” the fact of dealing with China, said the senior Westminster figure quoted above. Newton-Smith added: “I think the view is that the government’s engagement with eyes wide open is the right strategy. And under the previous government, we did lose out.” But for each person who praises the re-engagement, there are others who say it has left Britain vulnerable while begging for scraps at China’s table. Hawks argue the hard details behind the “three Cs” were long nebulous, while Labour’s long-awaited “audit” of U.K.-China relations was delayed before being folded briefly into a wider security document. “Every single bad decision now can be traced back to the first six months,” argued the third person familiar with planning quoted above. “They were absolutely ill-prepared and made a series of decisions that have boxed them into a corner.” They added: “The government lacks the killer instinct to deal with China. It’s not in their DNA.” Luke de Pulford, a human rights campaigner and director of the Inter-Parliamentary Alliance on China, argued the Tories had engaged with China — Foreign Secretary James Cleverly visited in 2023 — and Labour was simply going much further. “China is pursuing an enterprise to reshape the global order in its own image, and to that end, to change our institutions and way of life to the extent that they’re an obstacle to it,” he said. “That’s what they’re up to — and we keep falling for it.” END OF THE OLD ORDER? His language may be less dramatic, but Starmer’s visit to China does have some parallels with Canada. Carney’s trip was the first by a Canadian PM since 2017, and he and Xi agreed a “new strategic partnership.” Later at Davos, the Canadian PM talked of “the end of a pleasant fiction” and warned multilateral institutions such as the United Nations are under threat. One British industry figure who attended Davos said of Carney’s speech: “It was great. Everyone was talking about it. Someone said to me that was the best and most poignant speech they’d ever seen at the World Economic Forum. That may be a little overblown, but I guess most of the speeches at the WEF are quite dull.” The language used by Starmer, a former human rights lawyer devoted to multilateralism, has not been totally dissimilar. Britain could no longer “look only to international institutions to uphold our values and interests,” he said in December. “We must do it ourselves through deals and alliances.” But while some in the U.K. government privately agree with Carney’s point, the real difference is the two men’s approach to Trump. Starmer will temper his messaging carefully to avoid upsetting either his Chinese hosts or the U.S., even as Trump throws semi-regular rocks at Britain. To Peterson, this is unavoidable. “China, the U.S. and the EU are likely to continue to dominate global economic growth for the foreseeable future,” she said. “Starmer’s choice is not whether to engage, but how.” Esther Webber contributed reporting.

It seems impossible to have a conversation today without artificial intelligence (AI) playing some role, demonstrating the massive power of the technology. It has the potential to impact every part of business, and European policymakers are on board. In February 2025, Ursula von der Leyen, the European Commission president, said, “We want Europe to be one of the leading AI continents … AI can help us boost our competitiveness, protect our security, shore up public health, and make access to knowledge and information more democratic.” Research from Nokia suggests that businesses share this enthusiasm and ambition: 84 percent of more than 1,000 respondents said AI features in the growth strategy of their organization, while 62 percent are directing at least 20 percent of ICT capex budgets toward the technology. However, the equation is not yet balanced. Three-quarters of survey respondents state that current telecom infrastructure limits the ability to deliver on those ambitions. Meanwhile, 45 percent suggest these limitations would delay, constrain or entirely limit investments. There is clearly a disconnect between the ambition and the ability to deliver. At present, Europe lags the United States and parts of Asia in areas such as network deployment, related investment levels and scale. > If AI does not reach its full potential, EU competitiveness will suffer, > economic growth will have a ceiling, the creation of new jobs will have a > limit and consumers will not see the benefits. What we must remember primarily is that AI does not happen without advanced, trusted and future-proofed networks. Infrastructure is not a ‘nice to have’ it is a fundamental part. Simply put, today’s networks in Europe require more investments to power the AI dream we all have. If AI does not reach its full potential, EU competitiveness will suffer, economic growth will have a ceiling, the creation of new jobs will have a limit and consumers will not see the benefits. When we asked businesses about the challenge of meeting AI demands during our research, the lack of adequate connectivity infrastructure was the fourth common answer out of 15 potential options. Our telecom connectivity regulatory approach must be more closely aligned with the goal of fostering AI. That means progressing toward a genuine telecom single market, adopting a novel approach to competition policy to allow market consolidation to lead to more investments, and ensuring connectivity is always secure and trusted. Supporting more investments in next-generation networks through consolidation AI places heavy demands on networks. It requires low latency, high bandwidth and reliability, and efficient traffic management. To deliver this, Europe needs to accelerate investment in 5G standalone, fiber to enterprises, edge data centers and IP-optical backbone networks optimized for AI. > As industry voices such as Nokia have emphasized, the networks that power AI > must themselves make greater use of automation and AI. Consolidation (i.e. reducing the number of telecom operators within the national telecom markets of EU member states) is part of the solution. Consolidation will allow operators to achieve economies of scale and improve operating efficiency, therefore encouraging investment and catalyzing innovation. As industry voices such as Nokia have emphasized, the networks that power AI must themselves make greater use of automation and AI. Policy support should therefore extend to both network innovation and deployment. Trust: A precondition for AI adoption Intellectual property (IP) theft is a threat to Europe’s industrial future and only trusted technology should be used in core functions, systems and sectors (such as energy, transport and defense). In this context, the underlying connectivity should always be secure and trusted. The 5G Security Toolbox, restricting untrusted technology, should therefore be extended to all telecom technologies (including fiber, optics and IP) and made compulsory in all EU member states. European governments must make protecting their industries and citizens a high priority. Completing the digital single market Although the single market is one of Europe’s defining projects, the reality in telecoms — a key part of the digital single market — is still fragmented. As an example, different spectrum policies create barriers across borders and can limit network roll outs. Levers on top of advanced connectivity To enable the AI ecosystem in Europe, there are several different enabling levers European policymakers should advance on top of fostering advanced and trusted connectivity: * The availability of compute infrastructure. The AI Continent Action Plan, as well as the IPCEI Compute Infrastructure Continuum, and the European High-Performance Computing Joint Undertaking should facilitate building AI data centers in Europe.   * Leadership in edge computing. There should also be clear support for securing Europe’s access to and leadership in edge solutions and building out edge capacity. Edge solutions increase processing speeds and are important for enabling AI adoption, while also creating a catalyst for economic growth. With the right data center capacity and edge compute capabilities available, European businesses can meet the new requirements of AI use cases.  * Harmonization of rules. There are currently implications for AI in several policy areas, including the AI Act, GDPR, Data Act, cybersecurity laws and sector-specific regulations. This creates confusion, whereas AI requires clarity. Simplification and harmonization of these regulations should be pursued.  * AI Act implementation and simplification. There are concerns about the implementation of the AI Act. The standards for high-risk AI may not be available before the obligations of the AI act enter into force, hampering business ambitions due to legal uncertainty. The application date of the AI Act’s provisions on high-risk AI should be postponed by two years to align with the development of standards. There needs to be greater clarity on definitions and simplification measures should be pursued across the entire ecosystem. Policies must be simple enough to follow, otherwise adoption may falter. Policy needs to act as an enabler, not a barrier to innovation.  * Upskilling and new skills. AI will require new skills of employees and users, as well as creating entirely new career paths. Europe needs to prepare for this new world.  If Europe can deliver on these priorities, the benefits will be tangible: improved services, stronger industries, increased competitiveness and higher economic growth. AI will deliver to those who best prepare themselves. We must act now with the urgency and consistency that the moment demands. -------------------------------------------------------------------------------- Author biography: Marc Vancoppenolle is leading the geopolitical and government relations EU and Europe function at Nokia. He and his team are working with institutions and stakeholders in Europe to create a favorable political and regulatory environment fostering broadband investments and cross sectoral digitalization at large. Vancoppenolle has over 30 years of experience in the telecommunication industry. He joined Alcatel in 1991, and then Alcatel-Lucent, where he took various international and worldwide technical, commercial, marketing, communication and government affairs leadership roles. Vancoppenolle is a Belgian and French national. He holds a Master of Science, with a specialization in telecommunication, from the University of Leuven complemented with marketing studies from the University of Antwerp. He is a member of the DIGITALEUROPE Executive Board, Associate to Nokia’s CEO at the ERT (European Round Table for Industry), and advisor to FITCE Belgium (Forum for ICT & Media professionals). He has been vice-chair of the BUSINESSEUROPE Digital Economy Taskforce as well as a member of the board of IICB (Innovation & Incubation Center Brussels).