Trump versus trade: the global economic outlook for 2025 in five charts

Unpredictable change will sweep through America, while old problems, from war to inflation, are likely to afflict other countries

The global economy is entering the new year with rising geopolitical tensions looming over its prospects, as the world’s leading central banks attempt to cut interest rates after the worst inflation shock in decades.

Donald Trump’s second term in the White House is expected to dominate the economic agenda. Global trade tensions are on the horizon as the president-elect threatens to impose sweeping tariffs on US imports.

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Germany’s president dissolves parliament ahead of snap election

Formal step taken by Frank-Walter Steinmeier after chancellor Olaf Scholz lost confidence vote in Bundestag

Germany’s president, Frank-Walter Steinmeier, has dissolved parliament and called a snap election on 23 February after Olaf Scholz’s fractious three-way coalition collapsed three years into its mandate.

The national vote will come seven months ahead of schedule amid a rocky stretch of unusual political turmoil for the EU’s top economic power, with growth rates flatlining, industry in crisis and the far right on the rise.

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ECB faces tough task after flip in fortunes for eurozone economies

Economists say EU countries hardest hit by 2010s debt crisis now in stronger position than France and Germany

The European Central Bank is facing a tough balancing act in 2025 as it tries to navigate a reversal of fortunes in eurozone economies, as the hardest-hit nations of the 2010s debt crisis outperform the traditional core.

Highlighting a potential shift in power dynamics within the single currency bloc, economists said countries in the EU periphery ravaged by last decade’s sovereign debt crisis were in a stronger position than northern Europe’s most powerful nations, including France and Germany.

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Police raid migrant smuggling ring accused over small boat Channel crossings

More than 500 officers participated in the operation, which was co-ordinated with British, French and European agencies

Police have carried out dawn raids in several cities in Germany and France in an internationally coordinated operation to smash a network accused of smuggling migrants to Britain in small boats.

Coordinated with Europol, the French security service and British police after months of intelligence-gathering, the raids on Wednesday concentrated on western German cities where gangs are believed to have procured small boats and found migrants wanting to be taken to the UK from France across the English Channel.

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Court rules former Nazi camp guard, 100, can face trial in Germany

Gregor Formanek is charged with aiding and abetting 3,322 murders at the Sachsenhausen concentration camp

German authorities are pressing for a 100-year-old former Nazi concentration camp guard to face trial almost 80 years after the end of the second world war.

The higher regional court in Frankfurt said on Tuesday it had overturned a decision by a lower court under which the suspect had been deemed unfit to stand trial.

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German chancellor Olaf Scholz pledges €650m in military aid to Ukraine on Kyiv visit

Scholz said Germany was ‘strongest supporter of Ukraine in Europe’ and promised speedy arms deliveries

Olaf Scholz has met the Ukrainian president, Volodymyr Zelenskyy, in an unannounced visit to Kyiv that was his first since the early months of full-scale war as he sought to reassure Ukraine of German support.

The German chancellor announced a military aid package worth €650m (£540m) during the trip amid doubts over his Ukraine policy at home and uncertainty over the upcoming presidency of Donald Trump and what it may mean for the war in Ukraine.

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French sovereign borrowing costs rise to highest premium in 12 years

Government faces risk of collapse over planned austerity budget

French sovereign borrowing costs have soared to the highest premium since the eurozone debt crisis amid political turmoil as the government faces the risk of collapse over a planned austerity budget.

The gap between French 10-year government bond yields and their German equivalent ballooned to as much as 90 basis points on Wednesday, the widest level in 12 years, while shares listed on the Paris stock exchange also tumbled.

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Plan to cut Berlin arts budget will ‘destroy’ city’s culture, directors warn

Leading theatre figures warn ‘drastic’ reduction in funding will cause bankruptcy and harm city’s tourism appeal

Plans to slash Berlin’s culture budget by tens of millions of Euros have led to a huge backlash, with leading venues saying they have been forced to cut performances and others warning they will be pushed into bankruptcy.

About 450 institutes that are reliant at least in part on state subsidies, from theatres and opera houses to nightclubs and galleries, have formed an alliance in an attempt to force a rethink over the €130m (£108.6m) cuts. At around 12 to 13% of the current annual budget, they have been described even by those proposing them as “brutal”.

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Germany draws up list of bunkers amid Russia tensions

App planned for public to find emergency shelter in places including underground train stations and car parks

Germany is drawing up a list of bunkers that could provide emergency shelter for civilians, the interior ministry has said, at a time of rising tensions with Russia.

The list would include underground train stations and car parks as well as state buildings and private properties, a ministry spokesperson said.

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DHL plane crash in Lithuania may be result of sabotage, says German minister

Baerbock raises possibility of accident or ‘hybrid incident’ after Vilnius cargo plane crash kills one and injures three

The fatal crash of a DHL cargo plane as it approached Vilnius airport could have been the result of sabotage or an accident, Germany’s foreign minister has said.

A Spanish crew member was killed and three others injured when the German plane crashed into a house near the Lithuanian capital on Monday.

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Angela Merkel ‘tormented’ by Brexit vote and saw it as ‘humiliation’ for EU

Former German chancellor’s book tells how she tried to help David Cameron win over Britain’s Eurosceptics

Angela Merkel has said she was “tormented” over the result of the Brexit referendum and viewed it as a “humiliation, a disgrace” for the EU that Britain was leaving.

In her autobiography, Freedom, due to be published on Tuesday, the former German chancellor says she was dismayed by the notion that she might have done more to help the then British prime minister, David Cameron, who was keen for the UK to stay in the EU, but that ultimately, she concluded, he only had himself to blame.

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Angela Merkel expresses ‘huge concern’ at Elon Musk’s US government role

Former German chancellor says politics should govern the social balance between powerful and ordinary citizens

Angela Merkel, who in her new memoir raises fears for the western democratic order with Donald Trump as US president, has also expressed deep concerns about the outsized role to be played in Trump’s administration by Elon Musk.

The former German chancellor, who during Trump’s first term was given by some observers the designation of “leader of the free world” usually reserved for US presidents, said 16 years in power had taught her that business and political interests must be kept in fine balance.

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Scholz to lead SPD into snap German election after Pistorius withdraws

Chancellor’s popular rival says he is unavailable to stand, leaving Scholz as the default candidate

The German chancellor, Olaf Scholz, will be nominated as the candidate to lead his Social Democratic party (SPD) into the February general election after his more popular defence minister, Boris Pistorius, pulled out of the race.

After weeks of calls for a change at the top of the ticket, Pistorius released a video on Thursday in which he said he was “not available” to stand as the SPD flag-bearer in the snap election triggered after Scholz sacked his finance minister, Christian Lindner, imploding the three-year-old ruling coalition.

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Hungary invites Netanyahu to visit as world leaders split over ICC arrest warrant

Viktor Orbán says he will not enforce ICC decision that requires court members to detain Israeli PM if he enters their country

Hungary’s illiberal prime minister, Viktor Orbán, has said he will invite his Israeli counterpart, Benjamin Netanyahu, to visit in defiance of an international criminal court arrest warrant, as world leaders split over the ICC’s momentous decision.

The world’s highest criminal court issued warrants on Thursday for Netanyahu, his former defence minister Yoav Gallant and the Hamas commander Ibrahim al-Masri, commonly known as Mohammed Deif, who is believed to be dead, for alleged war crimes and crimes against humanity.

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What is hybrid warfare, which some fear Russia will use after Ukraine’s strike?

Strike with US-made missiles has prompted fears of Russian reprisal that would broaden the scope of a frontline

A Ukrainian strike using American-made missiles to hit targets deep inside Russia using American-made weaponry, has prompted renewed fears of reprisal through “hybrid warfare” – a chaotic tool of conflict that muddies borders and broadens the scope of a frontline.

Over recent years, European nations have witnessed a spate of incidents – cyber-attacks, arson, incendiary devices, sabotage and even murder plots. The aim of such episodes, security officials believe, is to sow chaos, exacerbate social tensions among Ukraine’s allies and disrupt military supplies to Kyiv.

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Scholz under pressure to stand aside for Pistorius before German election

Senior SPD figures hold talks on candidate for chancellor amid speculation about switch to popular defence minister

Germany’s chancellor, Olaf Scholz, is under mounting pressure to step aside as his party’s candidate for the job in February’s snap election in favour of his defence minister, Boris Pistorius, the most popular politician in the country.

The top brass of the Social Democratic party (SPD) are planning crisis talks on their choice of chancellor candidate for the 23 February general election on Tuesday evening while Scholz is flying home from the G20 summit in Brazil, local media reported.

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We assume damage to Baltic Sea cables was sabotage, German minister says

Boris Pistorius says ‘no one believes’ two undersea fibre-optic communications cables were cut accidentally

Germany has said it has to assume that damage to two undersea fibre-optic communication cables in the Baltic Sea since Sunday was an act of sabotage.

Two cables – one between Finland and Germany, the other between Sweden and Lithuania – were severed on Sunday and Monday, raising suspicions of a malicious attack, though authorities initially declined to speculate.

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Free Democrats reportedly planned German coalition exit weeks before final split

Pro-business party internally referred to its plans as ‘D-day’

Germany’s pro-business Free Democrats, who collapsed Olaf Scholz’s governing coalition earlier this month in a dispute over the budget, reportedly plotted their exit weeks before the final split, referring to their plans internally as “D-day”.

Newspapers Die Zeit and Süddeutsche Zeitung reported that the FDP had intended from at least September to force a situation that would provoke the German chancellor into pulling the plug on his tripartite coalition.

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Call for investigation into far-right EU politicians’ flights to Trump gala

Transparency International writes to EU requesting inquiry into potential failure to declare travel and ticket expenses

An NGO has called for an investigation into five far-right members of the European parliament, warning of a potential failure to declare expenses for a trip to attend a gala dinner in New York headlined by Donald Trump.

Transparency International’s EU office has written to the parliament’s watchdog on MEP conduct requesting an inquiry into five politicians over a potential failure to declare travel and tickets to the black-tie gala hosted by the New York Young Republican Club (NYYRC) in December 2023.

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The Gruffalo’s illustrator launches book to help UK pupils learn German

Axel Scheffler says he hopes Wuschel auf der Erde will encourage more children to learn his first language

Axel Scheffler, the illustrator behind the international children’s bestseller The Gruffalo, has launched a book to help primary school pupils learn German.

Wuschel auf der Erde: A New Adventure in Learning German tells the story of a friendly alien called Wuschel arriving on Earth from a distant planet with a mission to learn German. Through Scheffler’s distinctive illustrations, children are introduced to their first German words, such as die Maus (mouse) and der Spielplatz (playground), in a fun and interactive way.

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