Today we are starting a mini-series on issues that nobody in the Rejoin camp in the UK has on their radar screen and that will hit them like a ton of bricks. In today’s first instalment, we write about a return of the sovereign debt crisis, now an increasingly likely scenario given political developments in France. This might not sit easy with the storytelling about the EU’s apparently so successful economy. eurointelligence.com

Our lead story makes a point that European policy makers, and the media, are to much focused on AI going wrong. From a European perspective, the more likely scenario of AI to succeed and for Europe being left out, constitutes a far bigger systemic risk. eurointelligence.com

Macron and Tusk yesterday gave stark warnings about an escalation of the Ukraine war this winter as part of which Russia would target critical infrastructure and supply lines from Nato countries to Ukraine. Our lead story this morning. eurointelligence.com

In our latest podcast, our team discusses why the rise in the oil price understates the wider economic effects of the escalating war in the Middle East eurointelligence.com/Podcast…

Central banks used to base their monetary policy decisions on the Taylor rule – that worked well in practice, but not in theory. Today they use technical models that result in persistent overshoots of targeted inflation. In the euro area, the ECB’s policy rate is 2.5%. Under the Taylor rule, the right rate would be between 3.8-5.8%, depending on what assumptions one makes about the equilibrium real interest rate. Even under the most “optimistic” assumption, the current interest rates will not address the price shock we are currently observing. eurointelligence.com

In my latest Eurointelligence column, I discuss how and why the EU has lost the AI race and why the idea of the EU closing the gap with the US or China is delusional. eurointelligence.com/Columns

In our latest podcast, the Eurointelligence team discusses the persistent strength of the AfD, and how this compares to, and differs from the rise of far-right parties elsewhere in Europe. eurointelligence.com/Podcast…

The economic consequences of the high oil prices are much worse for Europe than the $107 Brent benchmark would suggest. Prices for petrol and diesel have risen by even more, as has the price for natural gas. Another inflation shock lies ahead. eurointelligence.com

It took the CDU two days after their election disaster in Saxony-Anhalt to jump on the “Lets Ban the AfD” bandwagon. The chances of this happening are next to zero because the strict constitutional hurdles for a party ban are not met. What we are seeing here, is the political centre in search of new ways not to solve the problem. eurointelligence.com

One of the reasons for the Icelandic No vote is that the pro-EU campaign made the same errors as the pro-Remain campaign in the UK did 10 years ago. They reduced the debate to silly economic arguments. In the Icelandic case it was the ludicrous assertion that joining the euro would lower inflation. eurointelligence.com

The Econoclasts are back in London!🚨 @yanisvaroufakis and @EuroBriefing will be tackling the ultimate settled fact: the permanence of capitalism. Is free-market capitalism already dead, and if so, what will replace it? 📅Join us on Friday 18 September at 7pm in the UnHerd Club to discuss. 🎟️Book your tickets: unherd.com/aftercapitalism

The French far-left talks about debt cancellation by the ECB. The German far-right wants Germany to leave the euro, on the grounds that balance sheet operations have turned the euro a weak currency. Not hard to see how those two discourses interact politically. None of this is about to happen, but it is significant that the future of euro has become part of the political discourse. eurointelligence.com

If you are as dependent on China for your supply chains as Germany has become, you would be hopping mad to support strong retaliatory action. It would also be based on a wrong diagnosis of Europe’s lagging competitiveness. This is not due to currency manipulation, but under-investment that has been going on for decades eurointelligence.com

The way Zelensky has been playing Trump is diplomatic very smart. That, however, does not change the reality of a war that Ukraine is slowly losing. There has been a lot of media hype recently about the turning tide. This does not reflect what is happening on the front line in the Donbas, where Russia's insurgence continues. eurointelligence.com

Draghi didn't advocate for defensive, protectionist actions,but called for a coordinated EU Auto Industrial Action Plan, focusing on massive investments in next-gen batteries, software etc, & advocated for joint EU procurement to maximize scale, lower costs, & build EU champions

Call it open strategic autonomy ! Open is disappearing Strategy ? We will see the outcome Autonomy - an #EU word for protection.

As expected, this agreement is guided by the same conservative instincts that brought Europe to where it is right now. Protectionism might be part of the solution, but it does not address the core of the problem, and we will likely witness just more bureucratic overreach, publicly funded legacy companies attempting regulatory capture, that will European energies down instead of unleashing them

There seems to be a deal under way where France agrees to Germany’s request to protect the car industry, and the Germans agree to the French request to limit access to public procurement only to European companies. Protection is the only conversation topic in the EU right now. We have three stories on this theme this morning. eurointelligence.com

In our latest podcast our team discusses three global risks scenarios: persistence of higher oil prices; higher long-term interest rates; and a trade war with China. Each one of those scenarios is problematic in its own right but together they are toxic. eurointelligence.com/Podcast…

Germany’s political firewall against extremist parties falls into the category of principled positions that end up as a denial of arithmetic. With parties of the far-right and the far-left attracting some 50% of the votes in eastern Germany, it will no longer be possible for the centrist parties to maintain their doomed perma-coalitions. Our lead story this morning. eurointelligence.com