How EU leaders fudged a compromise on integration of capital markets

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Good morning.

Today, we explain how EU leaders betrayed their public ambition for a more integrated European capital market by privately squabbling over the crucial details that would make it work. And our Rome bureau chief reports on the backlash to a move by Italy’s prime minister that allows anti-abortion campaigners to protest inside health clinics.

Have a good weekend.

Le grand fudge

EU leaders arrived at a meeting in Brussels yesterday proclaiming the imperative need to push ahead with integrating Europe’s capital markets, but as soon as the meeting room doors closed, long-standing divisions resurfaced, writes Paola Tamma.

Context: First proposed in 2014, the so-called capital markets union should transform Europe’s financial market into more than the sum of its parts, making it more attractive to investors. Currently, €250bn of EU capital leaves the bloc to other, less fragmented geographies each year.

Yesterday, a majority of smaller EU countries successfully pushed back against efforts led by France to centralise supervisory powers with Esma, the EU’s Paris-based financial markets regulator, as well as against harmonising corporate tax and insolvency laws.

France’s Emmanuel Macron and Germany’s Olaf Scholz co-ordinated their position in the morning in an attempt to bring smaller countries on board, two EU diplomats said. But that was in vain.

“I never bought into that. I still don’t and indeed many other member states didn’t,” said Simon Harris, prime minister of Ireland, which was part of the push by small states.

The coalition had different reasons to take issue with the reforms proposed by France and other large EU countries.

Luxembourg, where the financial sector makes up nearly a third of gross domestic product, felt that centralising its supervision at EU level would add regulatory burdens and costs for its industry. 

Sweden did not want to risk its well-developed and functioning capital market by handing oversight to Brussels.

Ireland stressed that harmonising corporate taxation, which is a national competence, was not up for discussion. 

Larger countries still called for progress. “There was a time where one or the other profited from special regimes . . . to get a good piece of the cake,” Scholz said. But this was “worth nothing” given Europe’s inability to mobilise resources for investing into the growth of its companies.

After around four hours of talks, leaders tasked the European Commission with assessing the need for more centralised supervision of large financial market actors, stopping short of giving Esma direct oversight powers, as demanded by France.

Leaders also called for “harmonising relevant aspects of national corporate insolvency frameworks”, but language on corporate tax was watered down after Ireland and others strongly pushed back against it.

EU finance ministers will pick up the ball again in May.

Chart du jour: Brain waste

Most European countries are failing to provide good job opportunities for highly educated migrants, at a potentially significant cost to their economies in need of workers. Read the next instalment of the FT’s Borderlands series on migration.

Reproductive rage

Before becoming prime minister, Italy’s Giorgia Meloni pledged she would strive to prevent abortions by offering women alternatives to terminating an unwanted pregnancy.

She’s now made her first move, writes Amy Kazmin.

Context: This week, Italy’s parliament approved rules championed by Meloni’s far-right Brothers of Italy party that allow anti-abortion activists to be present in clinics offering consultations on pregnancy terminations.

Feminists and centre-left politicians are up in arms.

Nicoletta Dentico of the Rome-based Society for International Development described the move as “a very sophisticated way to attack [abortion rights] without doing so directly”.

Italy legalised abortion in 1978, after a battle by feminist activists when dangerous illegal abortions were on the rise. But in practice, women face long waiting periods and a bureaucratic maze to access terminations. Nearly two-thirds of obstetricians and gynaecologists refuse to perform the procedure.

Silvana Agatone, founder of Laiga 194, an association of doctors upholding abortion rights, said she was “furious” at the prospect of activists entering clinics to provide “counselling”. She said this violated the right to privacy of women seeking medical consultations.

Dentico called it “psychological violence towards women who, for whatever reason, decide to have an abortion”.

Italy’s new rules are already making waves abroad. Spain’s minister for equality, Ana Redondo, described the measures as “organised harassment” of women in a post on social media platform X. “It is the strategy of the extreme right: to intimidate to reverse rights,” Redondo wrote.

Meloni hit back undeterred, saying Redondo was not informed on the Italian situation. “When you are ignorant on a topic you must at least have the good manners not to give lectures,” she told news agency Ansa.

What to watch today

European Commission president Ursula von der Leyen visits Finnish Prime Minister Petteri Orpo.

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