THIS WEEK: Next budget and protectionist industrial policy on EU agenda as EPP chief visits Ceuta

EU affairs ministers will hold a debate on Tuesday (22 September) on the next EU budget for 2028–2034, in the run up to the October’s European Council summit of leaders in Brussels. The 27 ministers will also hold the annual rule-of-law dialogue, including on Albania, Montenegro, North Macedonia, and Serbia, which are candidate countries for EU’s membership. The European Commission will also present its “letter of intent” on the 2027 legislative programme which was presented last week, alongside the State of the Union. The letter outlines the commission priorities with a focus on economy and competitiveness and it closes by tying everything to having an agreement on the next EU budget (including new sources of revenue such as carbon leak taxes or tobacco duties) “in time” — which for many means by the end of this year. It also outlines new proposals for the next legislative year, including a single market supply-constraints proposal, a permitting-acceleration proposal, banking and transport simplification packages, a European Security Strategy, a Climate Insurance Alliance, and a European Water Initiative, among others. On Thursday (24 September), internal market and industry ministers debate the Chips Act 2.0 and revised merger-control guidelines. They will also discuss the industrial accelerator act, the “28th regime” (an EU-wide legal framework for businesses), and the European Competitiveness Fund under the new budget infrastructure. The industrial accelerator act, tabled in March this year, is designed to channel public funds toward European-manufactured products in strategic sectors. But it has become a divisive file that will determine how protectionist Europe will get. Some countries like France are pushing for the so-called ‘Made in Europe’ preference while others like Sweden and Germany have favoured a more open approach. But economists from the Kiel Institute argue the definition for strategic sectors are too vague and broad, and it's not clear that some of the restrictions, especially on foreign investment from China, will actually produce economic benefits. “Overly burdensome conditions may discourage some investments and thereby also reduce the very spillovers the regime seeks to promote,” they said in an article published earlier in July. The president of the European People’s Party (EPP) Manfred Weber will travel with the conservative leader of the opposition in Spain, Alberto Nuñez Feijó, to Ceuta on Monday (21 September) — in a bid to "Europeanise" the issue and pressure Pedro Sánchez's government. For his part, German chancellor Friedrich Merz will be dealing with the aftermath of Sunday's (20 September) state elections in Berlin and Mecklenburg-Vorpommern which will once again test his political leadership of the country — following the AfD's win in the Saxony-Anhalt earlier this month. A survey published last week revealed that about half of Germans (48 percent) expected Merz not to be chancellor by the end of 2026. And while state election still focus on different local issues, many argue that dire results for Merz’ CDU is turning into an internal challenge to his leadership, and also making his federal coalition with the centre-left SPD harder to manage. In Paris, French firefighters are expected to take the streets on Sunday (27 September). UN and China summits With the mid-terms looming over the horizon in the US, president Donald Trump and his Chinese counterpart Xi Jinping will meet for their second summit this year, the first one in the White House in Washington, on Thursday. The meeting comes amid hopes of a tariffs-truce between the world’s two largest economies, plus the impact of the war in Iran, and Taiwan. Trump’s wars, tariffs and tensions with allies are also set to dominate the UN General Assembly in New York, with Ukraine, Gaza and Iran high on the agenda. Also this week, preparation will continue for a meeting in Beijing on 8 and 9 October between EU trade commissioner Maroš Šefčovič and China's commerce minister Wang Wentao. The EU is especially worried about the surge of Chinese exports into the EU, the lack of access of EU companies to the Chinese market, and the impact of China's export controls on rare earths. And the bloc has set an informal October deadline, threatening harsh measures if Beijing doesn't deliver credible commitments to rebalance the trade relationship.