Sometimes history is written by accident.

Europe is finally starting to wake up, but not by free will.

It’s because the US, under Trump’s second term, is forcing it to.

The catalyst was a national security blunder that read like political satire: Donald Trump’s defense team accidentally added the editor of The Atlantic to a private Signal chat.

This chat not only revealed military plans but also how senior US officials talk about Europe.

That leak made something clear: The US no longer views Europe as a strategic partner. It sees it as a liability.

Now, what’s left to find out is whether Europe will finally do something about it.

Is the transatlantic security assumption collapsing?

For decades, Europe’s economic model was underpinned by free-riding on US security guarantees. 

The truth is that NATO has allowed European governments to underinvest in defense while focusing on building welfare states, developing their single market, and pursuing regulatory leadership in areas like climate and data.

That arrangement no longer holds.

The Trump administration has made it clear that US security commitments are no longer automatic.

In Munich, Vance openly criticized European values.

The recently leaked chats revealed that Trump’s inner circle has called for financial compensation from Europe in exchange for US military action. 

Trump himself has floated the idea of pulling out of NATO’s top military role, the Supreme Allied Commander Europe.

This position has been held by the US since 1951.

The E5 and a new security architecture

With the United States stepping back, a new configuration is starting to take shape inside Europe. 

The informal group comprises 5 countries, which are now referred to as the E5.

These are France, Germany, the UK, Poland, and Italy.

This isn’t an official institution. There’s no treaty or secretariat. But it’s where coordination is happening.

These five nations bring together the bulk of Europe’s economic power, military strength, and political weight. 

France and the UK are nuclear powers and permanent UN Security Council members.

Germany has just lifted its constitutional debt limits to push through a €500 billion defense and infrastructure package.

Poland is already NATO’s biggest spender by GDP and is on track to have the largest army in Europe.

The goal is to present a phased plan for a European takeover of key NATO responsibilities before the June summit. 

Reports suggest that this plan may even include a European successor to the Supreme Allied Commander Europe post, should the US choose to walk away.

This is not a return to European federalism or even a revival of EU defense proposals.

It’s an ad hoc reaction by states that now know they can’t rely on Washington anymore.

Where will the new investment land?

One visible effect of Europe’s strategic awakening is the surge in public investment. 

Germany’s €500 billion infrastructure and defense plan is expected to raise GDP over the next decade. 

Defense firms like Rheinmetall and missile maker MBDA have reported rising orders.

Eurozone equities are up 12% since Trump’s second inauguration on January 20, while US stocks are down nearly in the same period.

For the first time in almost a year, economists have raised eurozone growth projections for 2026 from 1.2% to 1.3%.

Factory activity is also picking up, with eurozone business growth reaching a seven-month high in March.

But this momentum faces real limits.

Europe’s weaknesses are going to be stubborn. High energy costs, fragmented internal markets, and regulatory red tape are top priorities.

There is money flowing, but the bottlenecks are in absorption and execution.

Much of the defense and infrastructure funding will take years to manifest.

And while Rheinmetall or Strabag may thrive in 2025, steelmakers and SMEs will struggle with bureaucracy and energy volatility.

Trade and uncertainty are still hanging over everything

Europe’s export-driven economy has another problem to worry about: a looming trade war.

On April 2, the US is set to impose new tariffs on European goods. 

The ECB estimates that a 25% tariff could cut eurozone output by 0.3 percentage points in the first year.

If Europe retaliates, the impact could double.

Trade uncertainty is already freezing some investments.

Indexes tracking policy risk, trade disruptions, and investor confidence have spiked to all-time highs.

Executives across manufacturing and finance say they’re holding back on long-term decisions until they get a clearer view of where US policy is going.

That clarity may not come anytime soon, perhaps for a reason.

Is this an emergency response?

Some are calling this moment a European awakening.

Some even describe it as a turning point. But there’s a difference between strategic planning and being forced into action.

Europe doesn’t have a long-term vision. It’s reacting to sudden abandonment.

And while the pace of announcements is impressive, with more spending, new cooperation, and stronger language, the foundation is unstable.

The EU still can’t act as one on foreign policy. NATO, though still intact, may lose its command structure if the US walks away.

And while the E5 is moving fast, it excludes key players in European defense: the Nordics, the Baltics, and smaller states with serious capabilities.

There’s also the matter of public support.

Most European voters still oppose large defense budgets.

Governments are not yet being honest about what real autonomy would cost.

The most important shift in the US–Europe relationship isn’t about budgets.

It’s about identity.

The leaked Signal messages didn’t just mock Europe’s military spending, they revealed outright contempt.

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President Donald Trump signed an executive order on Tuesday aimed at tightening voting regulations, including requiring proof of citizenship on federal voter registration forms.

The move comes amid ongoing claims from Trump and his allies about election integrity, though no widespread fraud has been proven in the presidential election.

The order, titled “Preserving and Protecting the Integrity of American Elections”, was signed by President Trump at the White House.

The details of the Trump order

The order mandates that states receiving federal election-related funds comply with integrity measures, including the requirement that proof of citizenship be provided on the national mail voter registration form.

It also instructs the Department of Homeland Security to ensure states have access to systems that verify the citizenship or immigration status of individuals registering to vote.

Additionally, the order seeks to prevent mail-in ballots from being counted after Election Day, stating that votes should be “cast and received by the election date established in law.”

According to the National Conference of State Legislatures, 18 states, along with Puerto Rico, the Virgin Islands, and Washington, D.C., currently count ballots postmarked by Election Day even if they arrive later.

Non-citizens are already barred from voting in US elections under federal law.

The Illegal Immigration Reform and Immigrant Responsibility Act of 1996 explicitly prohibits non-citizens from voting in federal elections.

All states use a standard voter registration form that requires applicants to affirm their US citizenship under penalty of perjury.

However, the form does not mandate documentary proof of citizenship.

Potential legal challenges and opposition

Voting rights advocates have strongly criticized the order, arguing that it could disenfranchise eligible voters, particularly those who lack access to passports or other official documents.

Research from the Brennan Center for Justice indicates that around 21.3 million eligible US voters do not have proof of citizenship readily available.

The directive is expected to face legal challenges, as previous efforts to implement similar measures have encountered pushback in courts.

A Republican-led bill with similar provisions, the Safeguard American Voter Eligibility Act, failed to pass the Senate last year.

Efforts to review voter registration lists

The order also directs the Department of Homeland Security and the Elon Musk-run Department of Government Efficiency to audit state voter registration lists, using subpoenas if necessary to ensure compliance with federal requirements.

In parallel, the Republican National Committee (RNC) announced that it has requested public records from 48 states and Washington, D.C., to assess how voter registration lists are maintained.

“Voters have a right to know that their states are properly maintaining voter rolls and quickly acting to clean voter registration lists by removing ineligible voters,” RNC Chairman Michael Whatley said in a statement.

Trump, while signing the order, reiterated his concerns over election security. “We’ve got to straighten out our elections,” he said.

“This country is so sick because of the elections, the fake elections, and the bad elections. We’re going to straighten that out one way or the other.”

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The UK’s annual inflation rate edged down to 2.8% in February, slightly below the 2.9% forecast by economists polled by Reuters, according to data released by the Office for National Statistics (ONS) on Wednesday.

The decline follows a sharp rise to 3% in January, after inflation had unexpectedly fallen to 2.5% in December.

Core inflation, which strips out volatile items such as energy, food, alcohol, and tobacco, stood at 3.5% in February, down from 3.7% in January.

“The slowing in the rate into February 2025 reflected downward contributions from four divisions and upward contributions from five divisions. The largest downward contributions came from clothing and footwear, housing and household services, and recreation and culture,” the ONS stated.

Following the data release, the British pound slipped 0.1% against the US dollar, trading at 1.2925.

BOE’s next moves

The latest inflation figures add to the considerations for the Bank of England (BOE), which left interest rates unchanged at 4.5% in its recent policy meeting.

The UK economy continues to face uncertainty amid global trade policy concerns, potential tariffs, and a forecasted temporary rise in inflation later this year.

The UK economy has shown signs of weakness, contracting by 0.1% in January.

In a statement last week, the central bank noted that “global trade policy uncertainty has intensified, and the United States has made a range of tariff announcements, to which some governments have responded.”

It also highlighted rising geopolitical risks and increased financial market volatility.

The BOE had previously warned that inflation could temporarily rise to 3.7% in the third quarter, driven by higher energy costs.

It also halved its UK growth forecast for 2025 to 0.75%.

Govt’s action plan

The inflation data comes as Finance Minister Rachel Reeves prepares to present an update on government spending and taxation later on Wednesday.

Reeves is expected to outline measures to address a budget shortfall caused by higher borrowing costs since her last fiscal plan in the fall.

She has committed to adhering to her “fiscal rules,” ensuring that daily government spending is covered by tax revenues and that public debt declines as a share of economic output by 2029-30.

The Spring Statement, scheduled for 12:30 p.m. London time, will be delivered alongside updated economic forecasts from the Office for Budget Responsibility (OBR).

Reports indicate that the OBR may lower the UK’s growth forecast for 2025, potentially cutting its previous 2% estimate in half.

A weaker economic outlook is expected to add pressure on government borrowing and may require spending cuts of around £10 billion ($12.96 billion).

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Indian companies are accelerating their global expansion through overseas direct investment (ODI), with remittances reaching a record $36 billion in the first 11 months of FY25.

This marks a 40% increase from the $25.2 billion outflow during the same period in FY24, and significantly higher than the $24.8 billion recorded in FY23, according to Reserve Bank of India (RBI) data.

February alone saw ODI flows of $5.35 billion — the highest monthly figure in at least 38 months — reflecting the growing appetite of Indian corporates to fund subsidiaries, acquire assets, and scale operations abroad amid uncertain global trade conditions following Donald Trump’s re-election as US President.

Singapore, US, UK top destinations

Singapore emerged as the top destination for Indian ODI, attracting 23% of the total outflows in FY25.

Indian firms often use Singapore as an intermediary jurisdiction due to its favourable tax treaties with various countries.

The United States ranked second, drawing 16% of the total ODI.

While the volume of transactions to the US is higher than that of Singapore, most remittances are small-ticket in nature, typically below $100 million.

These are largely from Indian companies in the services sector, especially information technology.

The United Kingdom and the United Arab Emirates followed, accounting for 12% and 10% of ODI flows, respectively.

Both regions received funds from a wider range of sectors, including manufacturing, logistics, metals, and minerals.

The Netherlands and Mauritius were also key recipients, underscoring the diversity of India’s overseas investment portfolio.

Vedanta, Sun Pharma lead high-value ODI deals

February’s $5.35 billion spike was driven by several large transactions, including Vedanta’s $1 billion remittance to its Mauritius-based subsidiary, THL Zinc.

This made it one of the largest ODI deals of the fiscal year.

In December, Sun Pharma infused $829 million into its Netherlands-based subsidiary, further contributing to the upward trend.

In October, Biocon Biologics issued guarantees for its joint venture in the UK, Biocon Biologics UK Ltd, marking one of the biggest UK-bound remittances during FY25.

These transactions illustrate how Indian conglomerates are utilising ODI to support international expansion plans and strategic investments, particularly in the pharmaceuticals and metals sectors.

ODI growth up 40% in FY25

The overall ODI flow of $36 billion so far in FY25 represents a more than 40% increase compared to the same period in FY24.

This growth far surpasses the $24.8 billion in total ODI recorded during FY23, indicating a notable shift in how Indian businesses are deploying capital globally.

Unlike the Liberalised Remittance Scheme (LRS), which allows individuals to send up to $250,000 overseas annually, ODI permits companies to remit up to $1 billion per year for specific corporate purposes.

These include equity investments, loans, and guarantees to overseas subsidiaries or joint ventures.

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The Indian government believes robust domestic steel demand will counterbalance the impact of the European Union’s stricter steel import quotas, set to begin in April, according to a Reuters report.

The European Commission announced on Tuesday that it plans to implement stricter import restrictions on steel starting next month. 

This move is aimed at protecting the struggling European steel industry, which has been negatively impacted by a surge in steel imports. 

The Commission’s decision comes amidst growing concerns about the state of the European steel sector and the challenges it faces due to increased competition from imported steel. 

By tightening import restrictions, the Commission hopes to create a more level playing field for European steel producers and safeguard jobs in the industry. 

However, the move could also lead to higher steel prices and potential trade tensions with steel-exporting countries.

Additionally, the European Union has made the decision to implement stricter import quotas, also referred to as safeguards. 

These measures will restrict the quantity of steel that can be imported into the 27 member states without incurring tariffs. 

This is aimed at protecting the domestic steel industry within the EU by limiting the influx of cheaper foreign steel.

Domestic demand to cushion EU impact

The report quoted an anonymous source as saying:

There will be some impact but our (India’s) domestic consumption is growing so fast that the industry should be able to absorb.

The EU has been concerned about India’s steel exports, as Europe represents a major market for Indian steel products. 

This apprehension stemmed from potential disruptions to the European steel industry and the possibility of unfair trade practices.

India’s steel exports to the European Union have seen a significant surge in the current financial year. 

During the first eleven months of the financial year, India shipped a total of 2.03 million metric tons of steel to the EU. 

This figure represents a substantial portion, specifically 46%, of India’s total steel exports during that period. 

This further showed that the EU has emerged as a major destination for Indian steel, highlighting the growing trade relationship between India and the European bloc in the steel sector.

Despite India’s significant crude steel production capabilities, the country’s steel exports have historically been dwarfed by the domestic demand. 

This trend highlighted the substantial internal consumption within India, which ranks as the second-largest crude steel producer globally. 

This imbalance between exports and domestic consumption underscores the robust demand for steel within India’s rapidly growing economy and infrastructure development.

India’s steel consumption for 2023-24 was 136 million metric tons, while exports totaled just 7.5 million metric tons for the same period.

No significant impact from US tariffs

According to the report, there is likely no impact from the US steel tariffs as exports to America from India remain insignificant. 

The report also acknowledged that while Chinese steel exports to the US were relatively small, there was less worry about the diversion of steel flows towards India. 

Despite this, it emphasised that China continued to be the primary concern regarding steel trade and its potential impact on global markets.

India remained a net importer of steel during the first ten months of the current financial year (April-January), as it imported record amounts of steel from China, South Korea, and Japan.

In an effort to reduce imports, India had last week proposed a 200-day safeguard duty, which would place a 12% tax on certain steel products.

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