A submarine power cable connecting Finland and Estonia was damaged on Wednesday, Finnish Prime Minister Petteri Orpo announced. This marks the latest in a series of incidents involving submarine cables and energy pipelines in the Baltic Sea.

Arto Pahkin, operations manager for Finland’s electricity grid, informed public broadcaster Yle that the possibility of sabotage could not be excluded. However, Orpo assured that Finland’s electricity supply was unaffected by the blackout. “The authorities remain vigilant even at Christmas and are investigating the situation,” he wrote.

The energy operator Fingrid reported that the flow of electricity through the EstLink 2 cable, which transmits power to Estonia, was disrupted at 12:26 local time (13:26 TSI). This event follows a similar pattern of recent disruptions in the Baltic Sea.

Last month, two telecommunications cables linking Sweden and Denmark in the Baltic Sea were severed. Suspicion quickly fell on the Chinese ship Yi Peng 3, which monitoring websites indicated was near the cables at the time of the damage. Despite these suspicions, Sweden announced last Monday that Chinese authorities declined a request by Swedish prosecutors to investigate the vessel, which has since left the area.

Earlier incidents include the damage to the Arelion cable, running from the Swedish island of Gotland to Lithuania, on November 17, and the severing of the C-Lion 1 cable, which connects Helsinki to the German port of Rostock, on November 18 south of the Swedish island of Öland.

European authorities have suggested that these incidents may be acts of sabotage connected to the ongoing war in Ukraine. However, the Kremlin has dismissed these allegations, labeling them as “absurd” and “ridiculous.”

German companies, which form the backbone of the German economy and dominate 95% of the global export market in their respective niches, have outlined their expectations for 2025.

The so-called Mittelstand companies, often referred to as “family enterprises” rather than traditional SMEs, have voiced concerns about the anticipated rise in protectionism by 2025. They urged policymakers to adopt a pragmatic approach when negotiating free trade agreements.

A survey conducted exclusively for WirtschaftsWoche by the business associations Die Familienunternehmer and Die Jungen Unternehmer reveals that few expect a resurgence of free trade. Instead, over 75% of respondents fear the continued expansion of global protectionism by 2025.

In this context, approximately 820 business leaders surveyed in October called for greater pragmatism in European trade policies. A majority advised that the signing of new European free trade agreements should not be conditional on compliance with stringent environmental or social standards in partner countries. Only 31% of respondents supported such conditions.

“Increasing protectionism poses a significant threat to Germany’s position as an export powerhouse,” cautioned Marie-Christine Ostermann, President of the Association of Family Businesses. She added, “Eliminating non-tariff trade barriers simplifies bureaucracy, delivering a cost-free boost to growth. The German government must actively support this.” Ostermann emphasized that free trade agreements not only reduce tariffs but also create new jobs, thereby promoting widespread economic growth.

Open markets, she explained, are essential for ensuring economic stability, not just in Germany or Europe, but globally.

On a cautionary note, Ralph Ossa, Chief Economist of the World Trade Organization (WTO), warned of a “new narrative of globalisation.” He observed that many citizens and policymakers increasingly view trade as a contributor to inequality and environmental degradation rather than a solution. Consequently, Ossa does not foresee improvements in globalisation in the near future, as the global economy remains at a crossroads where key trade policy decisions will have profound impacts.

A recent study by the United Nations Conference on Trade and Development (UNCTAD) projects that global trade will reach a record level of nearly $33 trillion USD by 2024, driven primarily by a 7% growth in the services sector. However, UNCTAD’s outlook for 2025 is less optimistic, warning of potential trade wars and escalating geopolitical tensions.

On Monday, December 23, French Prime Minister François Bayrou announced the formation of the country’s fourth government for 2024, maintaining the political trajectory of the past seven years. The new cabinet comprises “Macronites,” key allies from previous administrations, and two former prime ministers, reinforcing continuity in governance.

The collapse of Prime Minister Michel Barnier’s government earlier this month, prompted by a no-confidence vote, appeared to signal opposition demands for substantial change. However, Bayrou’s cabinet largely maintains the status quo. The team is composed of pro-Macron figures, Bayrou’s confidants, seasoned conservative politicians, and other familiar faces, indicating that President Emmanuel Macron’s political line remains unaltered.

Expectations that the government might open up to social democrats were unmet. This iteration is less politically diverse than Barnier’s administration, which lasted only two and a half months. Former Prime Minister Élisabeth Borne, who handed over power to Gabriel Attal in January 2024, returns as Minister of Education, Research, and Innovation. Another former Prime Minister, Manuel Valls, will oversee Overseas Territories. Once a socialist, Valls has faced criticism for what some perceive as “political opportunism.”

Key ministerial appointments include Gérald Darmanin transitioning from Interior Minister to Justice Minister, Conservative Bruno Retailleau stepping into the Interior Minister role, and Eric Lombard, a former banking executive, taking over as Minister of Economy and Finance. He will collaborate with Amélie de Montchalin, the former EU minister and France’s permanent representative at the OECD, to prepare the 2025 budget.

Many ministers retained their posts, including Defence Minister Sébastien Lecornu, Culture Minister Rachida Dati, Labour Minister Catherine Vautrin, Agriculture Minister Annie Genevard, Foreign Minister Jean-Noël Barrot, and Europe Minister Benjamin Haddad.

This cabinet’s makeup raises questions about its stability. The New Popular Front (NFP), a left-wing coalition, is poised to oppose the liberal 2025 budget unless the controversial 2023 pension reform—raising the retirement age from 62 to 64—is suspended. Bayrou has expressed openness to “tweaks and improvements” but ruled out halting the reform entirely.

The National Rally (RN), led by Jordan Bardella, has adopted a watchful stance. While it declined coalition talks, it offered conditional support to Bayrou’s government, similar to its approach with Barnier’s administration. However, tensions arose over Xavier Bertrand’s potential appointment as Justice Minister, a move the RN opposed. Bertrand refused to serve, citing his values and unwillingness to align with a government influenced by Marine Le Pen’s party.

Bayrou has set a goal to reduce France’s budget deficit to approximately 5% of GDP by the end of 2025, down from over 6% in 2024. Speaking to BFM TV, he emphasized the need to cut “inefficient public spending” and floated the possibility of temporary corporate tax increases to achieve fiscal balance.

Eric Lombard echoed this sentiment during his swearing-in ceremony at the Finance Ministry, stating, “We must reduce the deficit without killing growth. It is this balance that we must seek, and this is what the 2025 budget entails.”

Lombard’s extensive financial background includes leadership roles at BNP Paribas and insurance giant Generali. Most recently, he headed the French public investment fund Caisse des Dépôts, focusing on public housing, infrastructure, and green projects.

Bayrou faces an uphill battle in securing parliamentary support for the 2025 budget and broader governance goals. His reliance on opposition forces, particularly the RN, has sparked criticism and uncertainty. RN leader Bardella dismissed the new government as a “failed coalition,” setting the stage for contentious months ahead.