The Bank of England’s 5-4 vote to cut Bank Rate to 3.75 % marks the sixth easing since August yet officials already warn the “easy” trims are over. Markets cheered, but sterling and gilt yields ticked up—signaling investors doubt Governor Bailey can keep borrowing costs low if fiscal policy keeps leaning on ever-larger deficits. (reuters.com)

By contrast, the Fed is pausing and the ECB is holding, leaving the UK as the lone G7 economy simultaneously easing and running a deficit now equal to 5 % of GDP. The Wall Street Journal notes the rate is “near a three-year low,” underscoring how far British real rates have flashed negative despite inflation still above target. (wsj.com)

Euronews reminds us headline CPI fell only because goods prices cooled; services inflation—and the government’s £132 bn April-November borrowing—remain sticky. (euronews.com) If growth disappoints again, the Treasury may be forced to borrow at higher real rates, repeating the 2010s’ austerity cycle in a nastier debt environment. “Monetary illusions melt when fiscal truths emerge,” warns economic historian Adam Tooze.

The Gist AI Editor

Geopolitical Tensions Flare

The Trump administration’s decision to impose a naval blockade on Venezuela is set to be tested by the Hyperion, a US-sanctioned tanker that previously transported Russian oil (Bloomberg). The blockade targets all sanctioned oil tankers and represents a significant escalation of pressure on the Maduro regime. This aggressive posture in America’s near-abroad risks setting a precedent that could complicate US foreign policy elsewhere, particularly in deterring potential Chinese actions against Taiwan. Caracas has condemned the move as a violation of international law, and global oil prices have seen upward pressure in response to the potential disruption of nearly a million barrels per day of crude supply (Bloomberg).

Tech Giants Navigate Regulatory Crosswinds

TikTok has reached an agreement to form a new US joint venture, averting a national ban. The deal places TikTok’s US operations under a new entity, with Oracle, Silver Lake, and MGX each holding a 15% share; TikTok’s parent company, ByteDance, will retain a 19.9% stake (AP). This intricate arrangement aims to address Washington’s national security concerns by storing US user data locally with Oracle and retraining the app’s powerful algorithm on US data. Meanwhile, e-commerce behemoth Shein dodged a potential ban in France after a Paris court deemed a complete shutdown a disproportionate measure (WSJ). The ruling provides a reprieve for the fast-fashion company, which had come under scrutiny for the sale of illicit items on its platform.

Market Consolidation and Fiscal Signals

In the biotech sector, BioMarin Pharmaceutical is set to acquire Amicus Therapeutics in a cash deal valued at approximately $4.8 billion (WSJ). This move signals ongoing consolidation within the rare disease market and is expected to significantly boost BioMarin’s revenue growth. Across the Atlantic, the UK government’s borrowing narrowed to £11.7 billion in November, down from £13.6 billion a year prior, largely due to increased tax revenues. However, for the fiscal year to date, borrowing remains elevated at £132.3 billion, the second-highest level on record since 2020, underscoring the fiscal challenges that lie ahead (ONS).

Stay tuned for the next Gist—your edge in a shifting world.

U.K. Government Borrowing Fell, But Challenges Ahead
— Wall Street Journal

Shein Averts Ban in France Over Childlike Sex Dolls, Weapons
— Wall Street Journal

BioMarin to Buy Rare-Disease Biotech Amicus Therapeutics for $4.8 Billion
— Wall Street Journal

TikTok Says It Signed Agreements for New US Joint Venture
— Bloomberg

Sixth Street’s Outlook for Private Credit in 2026
— Bloomberg

Sanctioned Tanker Hyperion to Test Trump’s Blockade of Venezuela
— Bloomberg

Italian Budget Brinkmanship

Rome’s coalition government has abruptly reversed course on its 2026 budget, pulling key measures on pensions and severance pay (Tfr) at the last minute. The reforms will be shunted into a future decree, a move that signals significant internal friction and introduces fresh uncertainty for markets. While tax incentives for business investments, known as “iperammortamento,” remain, the chaotic process undermines fiscal credibility. My read is that this isn’t just procedural; it’s a symptom of a government struggling to reconcile its electoral promises with economic reality. The last-minute scramble to pass a budget, only to postpone the difficult decisions, hardly fosters the stable environment needed for long-term investment.

EU’s High-Stakes Bond for Ukraine

The EU has crossed a notable threshold, agreeing to fund Ukraine with €90 billion financed through common debt (ZDF, Ansa). While a powerful gesture of support for Kyiv, this move pushes the bloc further into fiscal union, a path fraught with risk for member-state sovereignty and fiscal discipline. The market’s reaction was immediate: sovereign bond yields rose across the Eurozone. The closely watched spread between Italian 10-year bonds (BTPs) and their German equivalent (Bunds)—a key gauge of risk—closed at 68.9 basis points, with Italian yields climbing to 3.58% (Ansa). This isn’t free money; the rising yields are the market pricing in the new, shared liability.

Catch the next Gist for the continent’s moving pieces.

Manovra: saltano le norme su pensioni, Tfr e assicurazioni. Schlein: ‘Si è rotta la maggioranza’
— Ansa

China hits out at ‘unreasonable’ EU probes of its firms
— EUObserver

Not just hocus pocus: when words were used to treat the sick
— Deutsche Welle

Aktuelles zum Krieg in der Ukraine
— ZDF

Merz’ Bilanz im Jahr 2025: Versprechen groß, Erfolge kleiner
— ZDF

Europe mustn’t build its own house of dynamite | Letters
— The Guardian