The Politicization of Markets and Institutions: How Governments are Reshaping Economic Rules
Fecha: November 2025
Funcas Intelligence, November 2025
Sumario
The Fed delivered another rate cut, signaling cautious flexibility amid early signs of cooling growth, while the ECB held rates steady, emphasizing patience as inflation nears target and recovery stabilizes. Financial markets appear to be embracing a soft-landing narrative despite persistent geopolitical and financial crosscurrents.
Political paralysis and fiscal slippage in Paris have turned a founding EU member from anchor to epicenter, reviving contagion fears once confined to the periphery. Rising OAT–Bund spreads and credit downgrades expose how instability in France could fracture market confidence, test European Central Bank backstops, and reshape the balance of power in Europe’s fiscal union.
The EU's innovative proposal to leverage frozen Russian assets for a €140 billion “reparations loan” to aid Ukraine has hit a significant legal and political impasse, as Belgium blocked the plan over concerns of litigation and financial liability. The EU’s central challenge is to mobilize funding to support Ukraine meaningfully, preserve the euro’s credibility as a reserve currency, stay within the law, and avoid legal and financial liability for Belgium and other EU member states holding assets if Russia successfully retaliates.
Donald Trump’s “corporate nationalism” marks a new era of U.S. state capitalism—blending ownership, control, and regulation to extract rents from strategic sectors. Europe should respond by moving forward in creating a single market, as recommended by Mario Draghi’s 2024 report on EU competitiveness.
Large negative revisions to employment data have complicated the Federal Reserve’s task of gauging the degree of slack in the economy, with concerns related to the reliability of U.S. economic data adding to the already uncertain economic outlook. 2026 is set to mark the sixth consecutive year of inflation above the Federal Reserve’s two-percent target, heightening risks to its institutional credibility as prolonged price pressures could erode public and investor confidence in the Fed’s independence and effectiveness.