16. The Policy Watch

The Policy Watch is a weekly update which aims to provide concise insights into the current policy landscape. Tailored for our members and individuals interested in international affairs, this update offers a brief yet comprehensive summary of key developments affecting policy decisions and political trends in the UK, Sweden, and the EU.

UK CONFIRMS RAF TYPHOONS DOWNED IRANIAN DRONES

PM Rishi Sunak confirmed the involvement of RAF Typhoons in shooting down Iranian drones during the attack on Israel, stating that the U.K.’s engagement aided in safeguarding lives in Israel and nearby Arab nations. While the Prime Minister did not disclose specifics regarding the number of drones intercepted, estimations suggest the U.K.’s contribution was less than the figures claimed by the U.S. and Jordan. Sunak commended the courage and professionalism of the pilots involved, emphasising the protection of civilians.

UK CLIMBS TO FOURTH PLACE IN GLOBAL EXPORTS

Revised U.N. data reveals that between 2021 and 2022, the U.K. went from seventh up to fourth place in global export rankings, surpassing Japan, France, and the Netherlands in the process.

GOVERNMENT UNVEILS 2024 SPRING AMENDING BUDGET AIMED AT ECONOMIC RECOVERY

The Government has presented its 2024 Spring Fiscal Policy Bill and Spring Amending Budget, forecasting a significant decrease in inflation alongside a continued rise in unemployment. With an agreement between the Government and the Sweden Democrats, the proposed measures aim to navigate Sweden through the recession, bolster the welfare system, and enhance safety and security. The budget allocates SEK 17.3 billion towards supporting regions, expanding adult education, strengthening law enforcement, and fortifying defence and crisis preparedness, including ongoing support for Ukraine.

SWEDISH ELECTRICITY PRICES ON STEADY DECLINE

Electricity prices in Sweden have seen a substantial decrease this year compared to the previous, with recent days witnessing significant drops in the market, including instances of negative pricing lasting for several hours. Analysts expect this trend of low electricity prices to endure, citing factors such as heightened wind power generation and rising solar irradiance during spring. The decline is chiefly attributed to reduced costs of fuels like gas and coal, coupled with decreased prices for carbon emission allowances. At the same time, favourable hydrological conditions have resulted in surplus water in reservoirs, allowing hydroelectric producers to operate at lower price points.

SWEDISH AIRPORTS FALL SHORT OF NATO STANDARDS

Experts and investigators have highlighted deficiencies in Sweden’s airports, citing the inability to meet NATO membership requirements. Radar systems at eight smaller airports, such as Växjö, have been deactivated, with plans to affect five more later this year, while infrastructure for accommodating large military transport planes remains lacking. Despite doubling government subsidies to regional airports, financial constraints impede necessary investments to align with NATO standards, potentially impacting training and operational capabilities.

LEAKED EU PRIORITY LIST PRIORITISE SECURITY OVER ENVIRONMENT IN DECADE PLAN

A leaked EU priority list for the forthcoming decade reveals a distinct emphasis on security and defence, with minimal attention to environmental concerns. The document, subject to alterations before its endorsement after the European Parliament election in June, highlights a shift in EU leaders’ focus towards migration, defence, and foreign policy, sidelining climate change and biodiversity. Despite scientific warnings, the draft’s scant mention of environmental issues reflects a broader trend of prioritising security and economic interests over green policies.

PARLIAMENT FORMALLY ADOPTS SEVERAL ENERGY MARKET REFORMS

The European Parliament has formally adopted two legislative packages (one and two) focused on enhancing energy markets and promoting environmental sustainability within the EU. The measures include initiatives to enhance the EU electricity market’s sustainability and consumer-friendliness, facilitate the development of a hydrogen market, establish a certification framework for carbon removals, strengthen CO2 emission reduction targets for trucks and buses, and enact laws to reduce methane emissions from the energy sector.

PROVISIONAL AGREEMENT ON EXTENDING TEMPORARY TRADE MEASURES FOR UKRAINE

The Parliament and the Council have reached a new provisional agreement to extend temporary trade measures for Ukraine, suspending import duties and quotas on Ukrainian agricultural exports to the EU until June 5, 2025, to support Ukraine amidst Russia’s ongoing aggression. The move aims to stabilise the Ukrainian economy and facilitate its integration into the EU’s internal market amid the conflict. However, emergency measures can be imposed to safeguard EU farmers if significant disruption occurs, particularly for sensitive agricultural products such as poultry, eggs, and sugar.

EU PARLIAMENT ENDORSES THE NEW MIGRATION AND ASYLUM PACT

The European Parliament has approved ten legislative texts to reform European migration and asylum policies, which have been agreed upon with the EU member states. Measures include solidarity mechanisms, updates to asylum application rules, and crisis response protocols. The reforms aim to streamline asylum procedures, enhance border screening, and ensure equivalent reception standards for asylum seekers across member states. The Act will be published in the Official Journal following its endorsement by the Council.

However, both Polish PM Donald Tusk and Hungarian PM Viktor Orbán have expressed dismay with certain parts of the new Act. The latter’s government has stated that it will impose additional restrictions on Ukrainian Agricultural products.

ECB KEEPS INTEREST RATES UNCHANGED

The Governing Council of the European Central Bank (ECB) has opted to maintain the three key ECB interest rates at their current levels, citing a persistent decline in inflation primarily driven by lower food and goods prices. Despite strong domestic price pressures, the ECB remains resolute in bringing inflation back to its 2% target over the medium term, indicating a willingness to adjust policy instruments if necessary to achieve this objective. Additionally, the ECB is open to utilising the Transmission Protection Instrument to counter any disruptive market dynamics that may impede the achievement of its price stability mandate.