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Big Spend | Europe could spend as much as €14 trillion on defense and related infrastructure over the next decade, creating a major opportunity for private capital, according to Carlyle. It will need to coordinate supply chains to provide standardized designs — like Lego bricks — for basic system components from chips to drones to overcome national rivalries and competing platforms, the buyout firm said.
Tariff Retaliation | The EU plans to impose retaliatory tariffs on US imports if Trump puts a baseline levy on the bloc’s goods. EU officials expect the US to keep some duties in place, even after trade negotiations are concluded. “We will need to retaliate and rebalance in some key sectors if the US insists on an asymmetrical deal,” EU industry chief Stephane Sejourne, told us. Stress Test | European banks would see their profits eroded if an escalation of trade tensions with the US leads to souring corporate loans, according to S&P Global Ratings, although none of the 91 banks it examined were projected to face an annual loss in its stress test. The EBA and the ECB are scheduled to publish results of their own examination at the beginning of August. Carbon Market | A group of EU countries want changes to the region’s new carbon market in order to prevent a surge in prices that could trigger a backlash against ambitious climate measures. Member states including Austria, Belgium, the Czech Republic and Italy are seeking steps such as early auctions of permits and stronger price controls, according to a draft document we saw. Locked In | ECB officials are satisfied with the path of consumer prices, whose growth has receded from a record high to just below the central bank’s 2% goal, according to Vice President Luis de Guindos. Recent swings in commodities prices due to the war between Israel and Iran don’t change the outlook for inflation in the euro zone, he said. | 
