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.

German industrial giant Bosch on Friday confirmed plans to cut 20,000 jobs after profits nearly halved last year, underlining the mounting strain on Germany’s once-dominant manufacturing sector and increasing the pressure on politicians in Berlin to find a solution. Official data released Friday also showed Germany’s unemployment rate, unadjusted for seasonal factors, rising to 6.6 percent — the highest level in twelve years. The number of unemployed people surpassed three million in January. “Economic reality is also reflected in our results,” Bosch CEO Stefan Hartung said, describing 2025 as “a difficult and, in some cases, painful year” for the company, which is a leading supplier of parts for cars. The move lands amid a deepening slump in the country’s automotive industry, long the backbone of German manufacturing. The sector has been shedding jobs rapidly: A 2025 study by EY found that more than 50,000 automotive positions were cut in Germany last year alone. Germany’s automotive downturn has become a wider political test for the government in Berlin and Europe more widely. Once the economy’s crown jewel, the industry is now being challenged by current policy on electric vehicles, energy costs and aggressive competition from Chinese manufacturers. As suppliers weaken, the risk is shifting from lower profits to a lasting loss of competitiveness. With layoffs rising and investment decisions being delayed, Chancellor Friedrich Merz’s government is coming under growing pressure from workers, unions and industry leaders to rethink Germany’s industrial strategy — as doubts spread domestically and across Europe about the country’s ability to remain an economic powerhouse.

Europe isn’t doomed to inexorable decline — and in fact is doing better than most people realize, said the IMF’s Kristalina Georgieva. Much of the European Union’s policymaking bubble has been gripped with despair since the bloc’s weakness was exposed during a recent confrontation with the U.S. over Greenland. While U.S. President Donald Trump eventually backed down, the European military response — sending a symbolic handful of soldiers to the North Atlantic island — underlined that had the White House really wanted to seize Greenland, Europeans would have had no choice but to accede. But in an interview with POLITICO, Georgieva, managing director of the International Monetary Fund, said the pessimism was misplaced. In an end-of-year shortlist of top-performing economies put together by the Economist, she noted, the top 10 included seven EU countries, with Portugal in the top spot. The Iberian economy has recorded steady growth while comfortably paying down its debt in the past few years. That’s a fact, she said, that should be celebrated. “Europeans — we are modest people. We don’t brag,” the IMF head stated. She recalled how a U.S. colleague had recently done “something marginal.” “He said ‘oh, let’s look at this. I’m great. I’m fantastic,’” Georgieva recounted. “In Europe you do something great and you say ‘not too bad.’ In this world we are in now, you have to brag a little, exude confidence.” Even before the Greenland standoff, a sense of despair had settled over the top echelons of European economic decision-making. Mario Draghi, former head of the European Central Bank, warned that the bloc faced “slow agony” if it didn’t reform. Georgieva acknowledged the increasingly sharp-elbowed way in which countries now operate — one that leaves little room for multilateral organizations like her own IMF. In a speech earlier on Monday she acknowledged that the world had become “multipolar” — code for a new era of jostling geopolitical blocs that has replaced unilateral American dominance. Speaking to POLITICO, Georgieva said that “geopolitical factors play an increasingly bigger role in defining the world economy.” On Greenland, she said the fact that “allies find it more difficult to retain their sense of common purpose” was a “significant change.” But she insisted that the “destiny of Europe is in the hands of Europeans.” The IMF’s list of advice to reform the EU’s economy echoes Draghi’s own, contained in his competitiveness report from 2024: They include strengthening the single market, cutting regulations on businesses, and integrating the continent’s fragmented energy and financial systems. Mario Draghi, former head of the European Central Bank, warned that the bloc faced “slow agony” if it didn’t reform. | Olivier Matthys/EPA Georgieva said it was “paramount” for the EU to press ahead with reform. “Get your own house in order,” she said. Three of the Economist shortlist’s best-performing countries — Ireland, Portugal and Greece — were put under IMF supervision at the height of the eurozone crisis. There, they had to agree to painful adjustments known as structural reform programs, which included tax hikes and brutal cuts to public services. In the case of Greece in particular, those structural reforms resulted in a sharp increase in unemployment and poverty levels; gross domestic product per capita is still not at its pre-crisis level. But, said Georgieva, their current success is proof that countries, and the EU as a whole, can change their economic trajectories. Asked whether Europe should consider retaliating against U.S. aggression by selling off assets like government bonds, a suggestion included in a recent analyst report from Deutsche Bank, the senior official urged caution. “I would say that the smooth functioning of the international monetary system is of value to all countries,” she said. “Disturbing that smooth functioning of the international monetary system with the same token can bring negative impact.” The Bulgarian boss of the Washington, D.C.-based fund did, however, back a deeper pool of joint EU debt — an idea favored by Draghi but regarded with suspicion by frugal countries like Germany and the Netherlands. As for the disbursement of $8.1 billion in IMF funds to Ukraine to help the country meet its financing needs, Georgieva said she was aiming to hold an IMF board meeting in the second half of `February at which the board could approve the program and start paying out funds. Though the amount is relatively small — less than a tenth of the €90 billion that the EU has agreed to lend to Ukraine — IMF approval is a signal of confidence for financial markets. The IMF chief also said that a meeting “is scheduled” with U.S. Treasury Secretary Scott Bessent regarding the situation in Venezuela, and that it would happen in the “nearest future.” The IMF stopped working with Venezuela in 2019. The fund estimates that the South American country’s economy, battered by U.S. sanctions and plagued by mismanagement, has shrunk to a third of its previous largest size. Since the U.S. captured Venezuelan President Nicolás Maduro at the start of the year, it has floated the possibility of allowing Venezuela to access IMF financing again.

Prime minister’s questions: a shouty, jeery, very occasionally useful advert for British politics. Here’s what you need to know from the latest session in POLITICO’s weekly run-through. What they sparred about: The year that was. Prime Minister Keir Starmer and Tory Leader Kemi Badenoch’s last hurrah of 2025 saw everyone’s favorite duo row about the turkey Labour’s record over the last 12 months — and who caused the nightmare before Christmas. Pull the other one: Badenoch wished everyone a festive break in the season of goodwill — but then the gloves came off. She raised the PM’s own frustration at pulling levers but struggling to get change (Labour’s favorite word). “Does he blame himself or the levers?” Cutting. Starmer used the free airtime to rattle through his achievements, stressing “I’ve got a whole list … I could go on for a very long time.” Comparisons to Santa write themselves. Jobbing off:  “The Prime Minister promised economic growth, but the only thing that’s grown is his list of broken promises,” Badenoch hit back. This list analogy was really gaining momentum. She lambasted rising unemployment under Labour, yet the PM was able to point to lower inactivity under his watch and, of course, mentioned the boost of falling inflation this morning. Backhanded compliment: Starmer, no doubt desperate for a rest, used the imminent break to “congratulate” Badenoch for breaking a record on the number of Tories defecting to Reform UK. “The question is who’s next,” he mused, enjoying the chance to focus on the Conservatives’ threat to their right, rather than Labour’s troubles to its left. Clucking their tongues: Outraged at her Shadow Cabinet getting called non-entities, Badenoch kept the seasonal attacks going by labeling the Cabinet a “bunch of turkeys.” She said Starmer was no longer a caretaker PM but the “undertaker prime minister.” Bruising stuff. Last orders: Amid all the metaphorical tinsel and bells of holly, Starmer adopted a lawyerly tone on Labour’s support for pubs (even though many greasy spoons have banned Labour MPs) and condemned ongoing industrial action by resident doctors. But the Tory leader went out on (possibly) a new low by arguing Starmer “doesn’t have the baubles” to ban medical staff from striking and said all Labour MPs want “is a new leader.” Grab the mince pies: The prime minister’s speechwriters clearly did their homework with Starmer, not a natural on the humor front, comparing the Tories to “The Muppets Christmas Carol” and joking that all the defections meant Badenoch would be “left Home Alone.” Penalty shootout: Hold the homepage — PMQs actually delivered a news line. The PM confirmed the government issued a licence to transfer to Ukraine £2.5 billion of Russian billionaire Roman Abramovich’s cash from his sale of Chelsea football club. Starmer told Abramovich to “pay up now,” or he’d be taken to court. Teal bauble: The end-of-year vibes allowed Starmer to deploy a festive jibe of advice to Reform UK: “If mysterious men from the East appear bearing gifts, this time, report it to the police!” Labour just won’t let ex-Reform UK Leader in Wales Nathan Gill’s conviction for pro-Russian bribery go. Even Nigel Farage, sat up above in the VIP public gallery, had a chuckle, admitting “that’s quite funny” to nearby hacks. Helpful backbench intervention of the week: Tipton and Wednesbury MP Antonia Bance commended the government’s efforts to support the West Midlands by striking the U.S. trade deal, ripping into Reform. The PM just couldn’t resist another attack line against his party’s main opponent. Totally unscientific scores on the doors: Starmer 8/10. Badenoch 5/10. The final PMQs exchange was never going to be a serious exchange, given the opportunity to make Christmas gags. The Tory leader followed a scattergun approach, highlighting the various broken promises, but none landed a blow. The PM, doubtless relieved to bag a few weeks away from the interrogation, brushed them off and used his pre-scripted lines to deliver a solid concluding performance.

The Bank of England is set to cut interest rates on Thursday, after lower-than-expected inflation figures and signs of a weakening jobs market. Headline inflation slowed to 3.2 percent in November, from 3.6 in October, the Office for National Statistics said on Wednesday. That was the lowest since March and a much clearer drop than predicted by analysts, who had forecast a rate of 3.5 percent. “A cut tomorrow should be a no-brainer, with another to follow in February,” Peel Hunt chief economist Kallum Pickering said via social media, pointing to “No growth since summer, a labor market that is rapidly cooling, and a big downside surprise to inflation across the board in November.” The news comes only a day after labor market data from the ONS showed the unemployment rate rising to its highest level in over four years in October. The economy has struggled for growth in the second half of this year, after a sugar rush in the first quarter in which exporters rushed to get their goods to the U.S. before President Donald Trump could impose trade tariffs. The hangover from that — and the lingering uncertainty over the global economic outlook caused by Trump’s trade policy — has been severe. But at the same time, an unwelcome rise in inflation has stopped the Bank of England from cutting interest rates more quickly to support the economy. A raft of hikes in government- controlled prices such as energy bills and rail fares meant that inflation was rising for much of the year, leading it to peak at 3.8 percent in September. That was also partly due to companies passing on increases in labor costs due to a 6.7 percent hike in the National Living Wage and an increase in employers’ National Insurance contributions. Panmure Liberum chief economist Simon French said the wide range of goods and services now showing softening price trends showed that demand is now so weak that companies are having to absorb those price increases themselves instead. The government will be particularly relieved to have seen politically sensitive food prices, which have been a constant bugbear for the last couple of years, making the biggest contribution to the slowdown in inflation in November. Prices for clothing and footwear and for discretionary services such as restaurants and hotels also fell slightly. “As Christmas gifts go, this is a most welcome one,” said Danni Hewson, head of financial analysis at AJ Bell. “It’s the time of year when people put a few more things in their supermarket trolley, so news that food and alcohol inflation has fallen will be a boon for cash-strapped families.” The Bank has consistently said that inflation would fall once those factors passed out of the annual calculations, given that the underlying weakness of the economy. However, with the worst bout of inflation in half a century still fresh in everyone’s minds, it has been forced to keep the pace of policy easing “gradual and cautious”. Peel Hunt’s Pickering said that the scale of the slowdown could be enough to have some members of the Monetary Policy Committee voting for a half-point cut in the Bank Rate to 3.5 percent on Thursday. However, the consensus remains for a quarter-point cut to 3.75 percent. The pound still fell over half a cent against the dollar in response to the numbers, as traders penciled in more scope for easing next year, while the government’s borrowing costs in the bond market also fell.

PARIS — Emmanuel Macron was on a plane to Egypt when France faced the most serious crisis of his time in office. So why did the French president leave the country early Monday morning while there was such uncertainty at home? The answer, according to several current and former French officials, was to ensure his legacy. With fewer than 20 months left in the Elysée Palace, Macron is laser-focused on cementing his place in the history books — and believes he’s earned that distinction for his work in the Middle East, they said. The French president wasn’t going to miss his chance to be there for Monday’s peace summit in the Egyptian resort of Sharm el-Sheik, even with his house on fire and irrespective of it forcing his twice hand-picked prime minister, Sébastien Lecornu, to push back presenting his draft budget by a day, nearly missing the deadline. French officials in recent days have been working hard to craft a narrative that the Gaza peace plan pushed by U.S. President Donald Trump was triggered by Macron’s own proposal and his lead role in pushing for recognition of Palestinian statehood at the United Nations General Assembly last month.  That’s why Macron really wanted to make it to the summit in Egypt, said a government adviser who, like others quoted in this piece, was granted anonymity to speak candidly. An ally of Lecornu said the president was “very, very focused” on Gaza.  The French political system is designed so that the president can represent the country on the world stage while the prime minister looks after matters at home. But these are exceptional circumstances in France, with Lecornu resigning after just 14 hours before being reappointed and some politicians even speculating that Macron might not even see out his time in office. At first sight, Macron appears to be following in the footsteps of former presidents, such as François Mitterrand and Jacques Chirac, who pivoted to the international stage in the later years of their terms after losing their parliamentary majorities.   But Macron hasn’t let go of domestic policy. Unlike his predecessors, he isn’t adopting a “hands-off attitude,” said an early Macron backer.      “Macron has become very attentive to his European and international visibility,” said a former French official. “It’s what he’s got left to give himself the impression that he still has influence.” At first sight, Macron appears to be following in the footsteps of former presidents. | Joel Saget/AFP via Getty Images CHARM IN SHARM The Elysée last week went into lobbying mode, ramping up briefings with academics and journalists to drive home that Macron had been key to the success of Trump’s peace plan. “The Elysée’s priority was to spread the idea that their plan was very useful,” said a former diplomat, referencing the Franco-Saudi roadmap to end the war in Gaza. At the U.N. General Assembly last month, Macron risked drawing U.S. and Israeli ire with his push for Palestinian statehood, which was followed by close to a dozen Western states doing the same. His speech on the U.N. stage drew comparisons in Paris with other occasions when France stood up to Washington, in particular former Prime Minister Dominique de Villepin’s landmark 2003 address rejecting Washington’s march to war in Iraq. While in Egypt, Macron played carefully with the optics of power, of which he is an astute reader, to avoid being seen as playing second fiddle to Trump. He chose not to stand on the podium behind the U.S. president, instead sitting with Turkish President Recep Tayyip Erdoğan and Middle Eastern leaders, a move that was noted by Trump. Talking to reporters on the sidelines of the summit, Macron spoke about the efforts needed to keep the ceasefire in Gaza alive and the contribution France could make. Asked about national politics, he presented himself as “the guarantor of French institutions,” but could not help but lash out at opposition parties for trying to destabilize his prime minister. WINNING THE BATTLE, LOSING THE WAR Many officials say the French president is trying to remain above the fray. But there are several explanations as to why he’s doing so that go beyond the legacy argument. Some attribute it to the Jupiterian strategy of shrouding his office in mystique, communicating in grand gestures, and refusing to sully himself with the mudslinging of domestic politics.  One government official said Macron is “probably letting tensions dial down” and he is remaining silent to protect the institutional checks and balances of the French state.  Macron has cycled through centrist and center-right prime ministers in the past year. | Chip Somodevilla/Getty Images Others say the silence is strategic, even magnanimous. They say the president recognizes just how unpopular he is — a recent poll put his approval rating at 14 percent — and is trying to prevent his allies from being tarnished by his political toxicity.  But Macron never really lets go of anything. In his meeting with opposition parties last week, Macron made it very clear who calls the shots when, according to a presidential aide, he offered to partially delay his flagship pension law, which pushed back the age of retirement to 64 from 62 for most workers.  Macron has cycled through centrist and center-right prime ministers in the past year to fend off challenges to that law and other achievements such as his tax cuts. Many saw his decision to reappoint the loyal Lecornu, just days after he resigned in the aftermath of his 14-hour government, as the sharpest example of his dogged refusal to hand over power despite his camp losing last summer’s snap election.   Macron ended up being forced to sell off the crown jewel he had jealously been guarding, the pensions reform, at least for now. Lecornu announced Tuesday that he would freeze the law raising the retirement age until 2027, in order to secure support from the Socialist Party and survive a no-confidence vote on Thursday.  Macron might yet save his pensions reform as there are doubts swirling that the suspension might not pass through parliament.  But fighting tooth and nail to ensure his legacy might also destroy it if Macron can’t secure the future of his centrist movement and his potential successors, such as former prime ministers and likely presidential candidates Edouard Philippe and Gabriel Attal.   Macron’s handling of the current crisis will almost certainly affect the campaign of any centrist trying to stop Marine Le Pen, or someone else from the far-right National Rally, from winning the presidency.  “What image are we projecting? We’re in favor of pension reform, and then we give up. It’s not clear,” said the Lecornu ally quoted above. “The only one who appears to know what she represents is Marine Le Pen,” they said. “She has a populist message, but it’s simple and consistent: This circus must stop.” Pauline de Saint Remy and Giorgio Leali contributed reporting.

WARSAW — The cost of political fighting between President Karol Nawrocki and the Polish government, combined with a booming defense bill, is starting to show up in the country’s finances. Ratings agency Fitch said on Friday that the deadlock is weighing on Poland’s credit score, something that could push up the country’s borrowing costs. While the agency kept Poland’s long-term sovereign rating unchanged at A-, it cut its outlook to “negative” over concerns about public sector wages and defense spending. Those concerns are now compounded by the risk of EU funds getting frozen again. Brussels unblocked billions in cash thanks to promises from the centrist government of PM Donald Tusk that it would roll back unlawful judicial reforms pushed through under the previous populist right-wing Law and Justice (PiS) party government, which ruled Poland between 2015 and 2023. But the right-wing Nawrocki, who is backed by PiS, is unlikely to sign off on such legislation. Fitch said that repeated vetoes by Nawrocki of the government’s efforts to bring Poland back in line with EU law were paralyzing policy until the next parliamentary election in 2027. Fitch’s update quickly resulted in a blame game between Tusk’s coalition government and PiS. “This decision is the consequence of President Nawrocki blocking key legislation, which limits the space to strengthen the foundations of the economy and deliver the necessary fiscal consolidation,” Finance and Economy Minister Andrzej Domański said on X. Domański argued that while the government has restored growth, kept unemployment low and overseen the fastest disinflation in Europe, the negative outlook is a “warning signal” that should be heeded by Nawrocki and his advisers. Fitch’s update quickly resulted in a blame game between Donald Tusk’s coalition government and PiS. | Adam Warzawa/EPA PiS pushed back that the fiscal deterioration predates Nawrocki’s presidency, since he has only been in office since Aug. 6. PiS’s former deputy prime minister and defense minister, Mariusz Błaszczak, further warned that Fitch’s outlook cut “signals increased risk for investors, which could lead to higher borrowing costs on international markets.” This, in turn, could squeeze the defense budget and force the government to look for savings or new funding sources, he added. GROWING DEFENSE BURDEN Poland is NATO’s top defense spender relative to economic output, with 4.7 percent of GDP currently earmarked for that purpose. The country has recently joined the $1 trillion economy club and is set to attend the G20 summit in Miami in 2026 as an observer. Fitch underlined that the start of Nawrocki’s presidency “highlights likely challenges for the coalition government to implement policy. Since early August, the president has vetoed various bills and publicly stated his opposition to tax increases and proposed tax cuts.” With political tension already running high in the wake of this year’s presidential election, domestic considerations will increasingly dominate fiscal decisions in the run-up to the parliamentary vote in 2027. The election cycle could further weaken fiscal discipline, especially as “options for raising revenue are limited and a significant share of spending is rigid,” Poland’s Bank Millennium said in a note. Fitch projects the deficit will average 6.7 percent of GDP through 2025 due to the “lack of a credible consolidation strategy” before the next election. The figure is likely to hit 6.9 percent before the end of 2025, before easing slightly to 6.8 percent in 2026, still above the government’s budget projections of 6.5 percent. “Our forecast reflects our expectation of a limited ability to increase taxes, and continued increases in public investment and defense spending … despite additional revenue from the freeze of income tax thresholds and slower growth of public sector salaries and social spending,” the agency said. Fitch expects Poland’s general government debt to rise from 49.5 percent of GDP in 2023 to 59.3 percent this year and 68.3 percent in 2027, the result of continued primary deficits and guarantees for the army fund. Meantime, it expects interest payments to grow from 5.1 percent of revenues in 2024 to 7.2 percent in 2027, well above the 4.3 percent median for countries with similar credit ratings. Fitch’s update is a “clear signal for the government that the lack of action to visibly reduce the fiscal deficit could lead to a downgrade of Poland’s credit rating,” according to Bank Millennium. This article has been updated.

Listen on * Spotify * Apple Music * Amazon Music Zwischenfall im Plenarsaal des Bundestags: Erst verweist Julia Klöckner eine Linken-Abgeordnete des Saales, weil sie ein Oberteil mit Palästina-Aufdruck trägt. Kurz danach gibt es „Free Palestine“-Rufe von der Zuschauertribüne. Rasmus Buchsteiner und Rixa Fürsen ordnen die Vorfälle ein. Außerdem geht es um die geplante Reform des Bürgergelds. Arbeitsministerin Bärbel Ba äußert sich ausführlich dazu – dabei macht sie eine Ansage an Sozialbetrüger und schickt eine Absage an die Union. Personalie: Der frühere außenpolitische Berater von Olaf Scholz wird Staatssekretär im Verteidigungsministerium. Warum sich die Begeisterung darüber in Grenzen hält, dass Jens Plötner diesen neuen Job bekommt, erklärt Hans von der Burchard. Das Berlin Playbook als Podcast gibt es morgens um 5 Uhr. Gordon Repinski und das POLITICO-Team bringen euch jeden Morgen auf den neuesten Stand in Sachen Politik — kompakt, europäisch, hintergründig. Und für alle Hauptstadt-Profis: Unser Berlin Playbook-Newsletter liefert jeden Morgen die wichtigsten Themen und Einordnungen. Hier gibt es alle Informationen und das kostenlose Playbook-Abo. Mehr von Berlin Playbook-Host und Executive Editor von POLITICO in Deutschland, Gordon Repinski, gibt es auch hier:   Instagram: @gordon.repinski | X: @GordonRepinski.

Prime minister’s questions: a shouty, jeery, very occasionally useful advert for British politics. Here’s what you need to know from the latest session in POLITICO’s weekly run-through. What they sparred about: The economy, mostly. Tory Leader Kemi Badenoch picked Keir Starmer’s brains on the U.K.’s grim economic outlook — and got an unwelcome reminder of the Liz Truss era in reply. Here we go again: There was a brief consensus as Badenoch condemned a fire at Starmer’s north London home as an attack on democracy. Then she was on the march: why is unemployment on the up? Rising to the bait: Like a stuck record, Starmer repeated his greatest hits by laying into Badenoch for the “disastrous Liz Truss mini-budget.” Labour will not let that one go. In return, the Tory leader stressed there was “no point blaming everyone else” and sung her party’s praises in power. Shutting up shop: Badenoch’s questions went from the general to the specific, highlighting department store Beales’ last shop bringing down the shutters with a “Rachel Reeves closing down sale.” “What does the prime minister have to say to all the people who have lost their jobs?” Badenoch probed. While the PM, unsurprisingly, regretted any job losses, he turned the tables back on Badenoch’s scepticism about Britain’s new trade agreements. Strong message here: It was in this answer that Starmer’s new attack line, doubtless scripted carefully by No.10 strategists, got through the waffle both leaders can be guilty of. The PM said the Tories were “sliding into brain-dead oblivion,” echoing interviews in which he has said Nigel Farage’s Reform UK will be Labour’s main opponents next time round. On yer train! As a former trade secretary, Badenoch said the government should “not over egg the pudding” of their trade agreements, while dismissing a “tiny tariff deal” with Donald Trump. Starmer sounded apoplectic, urging Badenoch to “get the train” to the Jaguar Land Rover plant in Solihull after tariffs on U.K. cars were slashed. But but but: He didn’t promise unemployment would be lower next year. Grand finale! The personality clashes didn’t let up. The Tory leader said “Labour isn’t working” (geddit?) while the PM called the Tories a “dead party walking.” Someone’s had their Weetabix. Getting personal: Badenoch ducked asking Starmer about the government’s migration reforms, leaving that to Plaid Cymru’s Westminster Leader Liz Saville-Roberts. She said “somebody here has to call … out” the PM’s change of rhetoric towards immigration. Asking Starmer if he has any belief “which survives a week in Downing Street,” he responded: “Yes, the belief that she talks rubbish.” That got laughs from colleagues, at least. Helpful backbench intervention of the week: Labour’s North Warwickshire and Bedworth MP Rachel Taylor commended Starmer’s trade agreement with the U.S., asking, in an especially hard-hitting question, whether the PM would continue standing up for all workers. In a major, possibly era-defining development, Starmer confirmed he would do exactly that. What a revelation! Totally unscientific scores on the doors: Badenoch 6/10. Starmer 7/10. Starmer was able to play off the main advantage of government — showing action, particularly on trade deals the Conservatives didn’t land. Most notable though was not his anger towards the Tories, but his sheer dismissal of their relevance. Expect those arguments to ratchet up towards the next election, as Reform and the Tories battle for the right-wing vote.

LONDON — Britain’s green revolution is coming for oil and gas workers — but a lack of clarity from politicians is leaving them in limbo. In Westminster, Labour has promised to ditch reliance on fossil fuels in favor of solar farms and wind turbines. That means phasing out environment-wrecking oil and gas drilling in the North Sea — good news for the planet, but deeply unwelcome for the thousands of people who rely on jobs in the industry’s traditional Scottish heartlands. Worse still, experts say those workers have no idea what is about to hit them. “The workers in Aberdeen did not think that oil and gas was going to decline,” Emma Pinchbeck, who advises ministers as head of the independent Climate Change Committee, told MPs earlier this year, after a visit to the heart of the drilling industry in north-east Scotland. “There has been a failure of communication to those workers about the transition that’s coming,” she warned. Advisers to the devolved government in Edinburgh, which is led by the Scottish National Party (SNP), meanwhile see the same problem ahead. Workers north of the border are falling through a “communication gap,” said the economist Ann Pettifor, who advises Scotland’s government on energy policy as a member of the Just Transition Commission (JTC.)  Neither ministers nor industry are preparing people who are about to lose their jobs for what’s coming, she warned. British Energy Secretary Ed Miliband has insisted that, as jobs linked to fossil fuels decline, the government will train up “a clean power army of engineers, welders and technicians” to slot into new climate-friendly industries springing up around the green transition. But Labour is struggling to align its policies in London and Edinburgh, and its political opponents are already waiting in the wings, prepared to take full advantage of the confusion. That includes Nigel Farage’s Reform UK, a populist party hoping to land a more attractive offer with these voters: the promise to — like Farage’s hero Donald Trump — drill, baby, drill, until the North Sea’s reserves run dry. RUDE AWAKENING Labour has pledged to overhaul the U.K. energy system by 2030. At the same time as greenlighting a steady stream of solar farms and turbines, ministers have hiked taxes on fossil fuel developers and banned new drilling licenses in the North Sea. They insist workers need not fear the resulting whiplash. British Energy Secretary Ed Miliband has insisted that, as jobs linked to fossil fuels decline, the government will train up “a clean power army of engineers, welders and technicians” to slot into new climate-friendly industries springing up around the green transition. | Pool photo by Florence Lo via AFP/Getty Images Prime Minister Keir Starmer promises he can avoid a rerun of the mass unemployment seen after the deindustrialization of northern and midlands English towns in the 1970s and ’80s. “I’m never going to allow that to happen under a Labour government,” he said shortly after taking office.  New jobs in clean energy will be filled “using the skills of our North Sea workers … to decarbonize our country,” Miliband told last year’s Labour conference. But a clutch of Labour politicians in Holyrood publicly back union campaigns to keep issuing new North Sea licenses — opposing a policy central to their colleagues’ green ambitions in Westminster.  And the rebellion goes to the very top. “To put it bluntly, if the choice is more expensive imports from despotic regimes like Russia or new oil and gas, I think the answer has to be new oil and gas,” Anas Sarwar, Labour’s leader in Holyrood, told the New Statesman last month. Some Labour MPs in Scotland hint, too, at support for more drilling. “When the proposal to drill Rosebank [oil and gas field] goes in, I think we could send a signal over that,” said Torcuil Crichton, MP for Na h-Eileanan an Iar, referring to a legal judgment threatening the future of the North Sea’s biggest untapped oil and gas field. That signal should show workers “that we are on their side,” he said. Richard Hardy, who also advises Holyrood as a member of the JTC, said such inconsistent messaging has left oil and gas workers disoriented.  “The constant to-and-fro-ing around new extraction, the Rosebank stuff, the court case,” he said, “the lack of clarity on the government’s position on future extraction … There is a level of uncertainty [for workers] about ‘Well, where do I go now?’” The North Sea is home to “very, very intelligent and switched-on workers,” said Claire Peden, an organizer at Unite the Union — but “a lot of them don’t believe that it [job losses] is an immediate threat.” The idea that the industrial switch to net zero could produce jobs just doesn’t resonate with the public, argued Steve Akehurst, director of Persuasion UK, an independent research body. “Things like jobs and growth and bills — if [ministers] could convincingly land that message about net zero helping with those things, that would be amazing. But it has a bit of a credibility problem with voters. It’s not intuitive,” Akehurst said. PLENTY TO GO AROUND The SNP, unsurprisingly, blames the Labour government in London, which it accuses of sowing “confusion” across the industry.  “We were promised that there would be no cliff-edge approach to the energy transition, yet this Labour U.K. government has done little to quell that suspicion. If you don’t have investment then you don’t have jobs, and in the real world outside of Westminster it really is that simple,” said Dave Doogan, SNP energy spokesperson.  The SNP, unsurprisingly, blames the Labour government in London, which it accuses of sowing “confusion” across the industry. | Ian Forsyth/Getty Images A DESNZ spokesperson argued that the government had invested heavily in clean teach in the North Sea, adding: “Through our North Sea consultation, we are in dialogue with North Sea communities — businesses, trade unions, workers, environmental groups and communities — to develop a plan that enables us to take advantage of the tremendous opportunities of the years ahead together.” All this is against the backdrop of the SNP’s own shifting messaging about drilling off the Scottish coast. The party pivoted suddenly last year to backing new North Sea licenses, provided developers could pass climate tests, after years of governing with a built-in assumption against new drilling. The SNP’s political opponents claim its position changed yet again earlier this year, a charge the party denies. Amid all this, the multiplier effect of job losses could be devastating, Hardy said. “A platform is a small village floating around in the North Sea,” he explained. “You have the production workers. You have the people who support the production workers. You’ve got safety, transport. You have a whole community of people living on that rig.” Greener jobs can’t fill these gaps, he argued. “The energy produced by that rig will be produced by a windmill [instead],” he argued, “which employs one person in a control room monitoring the activity of that windmill.” According to Offshore Energies UK (OEUK), which lobbies on behalf of oil and gas companies, around 120,000 jobs will be affected by the transition. The figure is disputed by some green campaigners who claim the true number is in the tens of thousands. PARCEL-PASSING Pettifor, the economist, believes the communications problem is structural. “You don’t have the communication channels that used to exist,” she said, now that many of Aberdeen’s workers are employed indirectly via agents. “That means governments have to step in to fill that communications gap. And they haven’t understood how serious the information gap — the communication gap — is, in order to fill it, in order to provide advice to people who are going to lose their jobs.” Nigel Farage, who calls Labour’s net zero policy a “catastrophe,” wants U.K. drillers to extract every last drop from the North Sea. | Finnbarr Webster/Getty Images In the absence of a clear steer from government, information is left to flow from corporations to employers. And that isn’t happening either, Pettifor said. “We’re waiting for the private sector to do that. As a result, the communication falls between the cracks.” OEUK dismissed the claim the industry was not talking to its workers. “Those operating oil and gas assets, and those involved in servicing those assets regularly, actively engage with their staff. So there’s no doubt that staff are well engaged. Contractors are well engaged with their employers,” said Mike Tholen, OEUK’s sustainability and policy director. The unions, meanwhile, blame Labour.  “They’ve lost the room completely, they’re so out of touch. They’ve built their election campaign on false promises. They’ve now been exposed and been called out,” said Unite’s Peden. “I just don’t see how they can pull this back in Scotland,” she added. REFORM RUSH IN Farage, amid this sense of alienation, eyes an opportunity to try and ambush both Labour and the SNP.  Farage, who calls Labour’s net zero policy a “catastrophe,” wants U.K. drillers to extract every last drop from the North Sea. One leading pollster predicted at the end of last year that Reform could do well enough in Holyrood elections in 2026 they will end up holding the balance of power in Edinburgh. This is borne out in YouGov polling at the end of March, which placed Reform second in Scotland, behind the SNP but comfortably outpacing Labour and the Conservatives. Reform’s second-in-command, Richard Tice, said workers are being “completely” caught off guard. “They’ve been lied to,” he said. “And people get very cross when good, skilled work [and] paid jobs get thrown in the dustbin for no good reason. And they can see that very loud and clear.” Reform’s electoral strategy in Scotland is, Tice said, to “just keep ramming home this message that you’ve been lied to, you’ve been misinformed, you’ve been misled.” The Tory opposition sees an opportunity here, too.  “We are taking down oil fields in Scotland because the [net zero] plan does not make sense,” leader Kemi Badenoch told an event in March. Pinchbeck, the climate watchdog boss, is more optimistic about the future of North Sea jobs — but told MPs that communication with those at the sharp end of the changes needs fixing, and fast. “Only about one percent of the [oil and gas] workforce are in industries that we cannot see moving over to net zero industries or new opportunities when you look at the U.K. overall,” she said. “But if you are in Aberdeen, that clearly feels different. There is a real need to have better conversations there.”