Global week ahead: Europe under fire

President Donald Trump’s verdict on Europe: a “decaying” group of nations led by “weak” people.

His criticism in a recent Politico interview adds to a tough period for the bloc, with challenges on multiple fronts testing European leaders in the final weeks of the year.

Next week looks set to be critical, with a high-stakes summit in Brussels and the European Central Bank’s final policy meeting of the year. Let’s take a look at some of the key topics for next week:

At the summit in Brussels on Thursday (and possibly extending into Friday), European leaders are expected to address the most pressing challenge — how to sharpen military capabilities and support the funding of the war in Ukraine.

Key to this is an agreement on how to use billions of frozen Russian assets to underpin a 210-billion-euro loan ($246 billion) to Kyiv. Defending Ukraine’s borders as part of any peace agreement will also remain critical, with President Volodymyr Zelenskyy proposing a vote or referendum within Ukraine on whether to allow parts of the Donbas region to be ceded to Russia as part of the U.S. peace plan.

Tensions between the White House and Europe following Trump’s comments will only challenge this process, with NATO Secretary General Mark Rutte issuing a stark warning this week that “we [Europe] are Russia’s next target, and we are already in harm’s way.”

Another fractious front for Europe is the Big Tech space. The bloc has been heavily criticized by the Trump administration for its targeting of American tech giants. U.S. Trade Representative Jamieson Greer said he was “disappointed” by the EU’s use of the Digital Services Act, despite agreeing to “fair treatment” of U.S. digital giants as part of the July trade agreement.

The bloc has issued fines to X for violating content-moderation laws, and put Google under an antitrust investigation for its use of content to inform its AI models. Meanwhile, Meta has offered to make changes to its Facebook and Instagram services to avoid further investigation and fines from the EU.

There is a bright spot for Europe this week. The European Central Bank meets on Thursday for its final policy-setting meeting of the year. Speaking to the Financial Times, ECB President Christine Lagarde said the central bank was likely to lift its growth forecasts again in December, after raising its prediction for annual GDP growth to 1.2% back in September.

Broad consensus is that this improved outlook will also support the central bank’s decision to keep rates on hold at 2% for another month. Throughout December, ECB board members themselves have reinforced this messaging:

Isabel Schnabel: rates unlikely to change soon

Francois Villeroy de Galhau: no reason to raise rates soon

Gediminas Simkus: no need for change to rates

Joachim Nagel: rates are currently in a good place

Monday: EU foreign affairs council meeting

Tuesday: EU general affairs council meeting

Wednesday: EU inflation data, UK inflation data, German IFO index

Thursday: EU leaders summit, ECB meeting, BOE meeting, Riksbank meeting, Norges bank meeting

Friday: EU leaders summit may continue