Ivaylo Iaydjiev

The car crisis tops today’s EU summit but leaders keep staring at the wrong problem

The issue isn’t the 2035 engine ban - it’s demand falling off a cliff today

With @sandertordoir.bsky.social and @lucasguttenberg.bsky.social, we show why flipping regs won’t help - and what the EU can do instead.

Breaking news: The 2025 Nobel Prize for Economics has been awarded to Joel Mokyr, Philippe Aghion and Peter Howitt for their work explaining how innovation can drive economic growth. on.ft.com/3WEvVZq

“Brussels” is the phantom menace Europe loves to blame Why bashing the EU is likely to become ever more popular

"Given that national governments form the backbone of the eu, “blaming Brussels” is akin to a ventriloquist haranguing his own puppet for being foul-mouthed"

“Brussels” is the phantom menace Europe loves to blame
www.economist.com/europe/2025/...

Europe’s great stockmarket inversion The hottest places to invest are on the continent’s periphery

It's not just the stock market as well. On the economy at least, it is a two-speed Europe, just not in the way that it's advocates expected.

The drivers have switched.

Europe’s great stockmarket inversion
www.economist.com/finance-and-...
From The Economist

What if the AI stockmarket blows up? We find that the potential cost has risen alarmingly high

Bubbles are normal when new technologies emerge. We analysed historical crashes to see how severe the consequences could be, and for whom

The bond doom-mongers have got at least one thing right Pressure on government borrowing costs is building

The bond doom-mongers have got at least one thing right on.ft.com/3V0smwb | opinion

Some people go to Paris to visit the Louvre, the Eiffel Tower or Jim Morrison’s grave. I’m visiting the birthplace of the eurodollar market. 🤩

One of the blindspots of the Draghi report was the lack of acknowledgement that it is CEE which is the EU growth engine since COVID.

Competitiveness and growth challenges in EU as a whole are different that the ones in DE or FR.

Now, officially, Bulgaria will join the euro on 1/1/2026.

www.consilium.europa.eu/en/press/pre...

So yes - the Bulgarian economy is ready, the country has transparently fulfilled all criteria, and Bulgarian society has given a clear mandate.

This does not mean that everything will magically improve 1 January 2026. Much work remains.

Yet, this is a moment to celebrate - both for 🇧🇬 and 🇪🇺. /end

This goes beyond the economy. While there are financial gains for 🇧🇬 that already has a popular currency board, this is also about identity.

Joining the euro area, after Schengen last year, finally puts 🇧🇬 at core of 🇪🇺. This also means security and less scope for local political economy "adventures".

Third, what about society? Some politicians are calling for a referendum and polls remain 50/50.

However, 🇧🇬 had 7 elections since 2021. In all of them, a vast majority voted for parties that put joining the euro as a core electoral promise.

Despite opportunism, this is a real democratic mandate.

Inflation took longer of course to come down to reference value - until early 2025. This is what happens in small open economies hit w/ supply shocks.

Important to emphasise that numbers are internationally verified, and no outliers are taken out of calculations by EU for 1st time in ~20 years.

Second, has 🇧🇬 fulfilled all criteria? Take it from the Commission and ECB - yes.

Public debt is 2nd lowest in EU (24% GDP); deficits have stayed within 3% w/ Ukraine and energy shock; interest rates and legislation (since 2024) are in order.

Bulgaria is also part of the Banking Union since 2020.

Importantly, all this has happened with fiscal discipline. But even more importantly - not at the price of austerity.

In the past few years 🇧🇬 households actual consumption has reached over 70% of EU average, thanks to strong wage growth outpacing inflation (which also reduced inequality).

First, is the economy ready? After all, 🇧🇬 remains one of the poorer EU states.

Key point is that BG has been in a (very) fixed currency board with the euro for quarter of a century. It has continued to grow, catch up, and export.

So yes, BG is and will remain competitive with the euro.

Today #EU finance ministers will officially welcome Bulgaria as the 21st member of the euro area 💶 from 1/1/2026.

This has been a long journey since 2007, with key progress in the past 5 years.

How did Bulgaria make it? Here are three key points about 🇧🇬 economy and society and some myth busting.

Economic development moves jobs from agriculture to manufacturing, and then on to services
• Drop in share of manufacturing jobs mostly illustrates productivity growth through automation
• In real terms US manufacturing output is more than twice higher than it was in early 1980s

Since Politico asked, I explained (see link).

TLDR- no, 🇧🇬 did not game its data.

Effect was 1/12th of what is claimed and does not change fulfilment of criterion.

Let's make sure this does not fuel disinfo.

@izakaminska.bsky.social @atanaspekanov.bsky.social

open.substack.com/pub/europebu...

Who were the 10 largest military spenders in 2024?

1) United States 🇺🇸
2) China 🇨🇳
3) Russia 🇷🇺
4) Germany 🇩🇪
5) India 🇮🇳
6) United Kingdom 🇬🇧
7) Saudi Arabia 🇸🇦
8) Ukraine 🇺🇦
9) France 🇫🇷
10) Japan 🇯🇵

New SIPRI data on #MilitarySpending out now ➡️ bit.ly/3GH5GNe

Hell is other people’s currencies As the Trump administration may soon find out

Amazing to have an article so focused on exchange pegs without *the* trilemma :)

That said, interesting fact - 🇧🇬 has one of the longest fixed pegs in modern monetary history, from 1997 to today. It served the country well & 🇧🇬 is on track to adopt the euro in 2026.

www.economist.com/finance-and-...

Avoiding Kindleberger’s Trap Why doubts over the Fed’s dollar swap lines are such a big deal

It is never a good financial sign when Kindleberger and central bank swap lines are in the FT. For now, a "what if" scenario.

Avoiding Kindleberger’s Trap - on.ft.com/421m2Zw via @FT

This is the analysis I've been waiting for, @SimonEvenett & Fernando Martin apply the US's "reciprocal tariff formula" to services trade. If others looked at services the way the US is looking at goods they'd be justified in imposing some big tariffs! globaltradealert.org/reports/ZEIT...

Import-extort: what to make of Donald Trump’s titanic tariffs Economist Podcasts · Episode

One of the better podcasts on the BIG TRADE THING, focused on the impact in the US. Esp. good with @douglasirwin.bsky.social on historical analogies and contemporary political economy.

open.spotify.com/episode/50as...

Europe’s armsmakers have ramped up capacity Now they need governments to place bigger orders

Interesting, but incomplete picture, esp. on ammunition. Eg. In 2024 🇧🇬 Arsenal had turnover of EUR 0.5 bn, and 🇧🇬 exports were EUR 2.2 bn. And that's before 🇵🇱, and let alone 🇺🇦 are factored in. It is not just about 🇫🇷 or 🇩🇪.

Europe’s armsmakers have ramped up capacity
www.economist.com/europe/2025/...

If it comes to a stand-off, Europe has leverage over America But pulling some of those levers would be so damaging as to make them unusable

If it comes to a stand-off, Europe has leverage over America
www.economist.com/briefing/202...
From The Economist

Heavy Industry Is Europe’s Trump Card The continent has an upper hand in its looming security competition with the United States.

I wrote a new piece for foreign policy.

The US's postwar role as guarantor of Europe’s security is over – and may even turn adversarial. But Europe has an overlooked trump card.

When it comes to manufacturing Europe blows the US out of the water.

Thread.

1/

foreignpolicy.com/2025/03/07/e...

"When geopolitics forces you to choose between being a fiscal hawk and a defence hawk, it’s fiscal rectitude that gives."

Not exactly what you are looking for, but Trillions by @robinwigglesworth.ft.com was quite interesting

Let's be clear on the market signal:

Bond yields in Europe took a bump up today. But so did equity markets, especially in Germany.

The first signal here, it seems to me = higher growth path. Plus: reserve managers will buy Bunds and European bonds as well (US risk not great right now).