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Mike Johnson may have to choose between Ukraine aid and his job

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SPARE SOME pity for Mike Johnson, the stuck speaker of the House of Representatives. A relatively obscure congressman thrust into leadership six months ago when the ungovernable Republican majority threw out the former speaker, Kevin McCarthy, Mr Johnson may be defenestrated too if he does something that he seems to think that he must: provide additional military aid to Ukraine, over the objections of the isolationist wing of his party.

While the European Union and its member countries have contributed considerably to Ukraine’s budget and humanitarian needs, America has been Ukraine’s largest provider of military aid, amounting to $44bn since Russia’s invasion in February 2022. But further help has been stuck for months. In October 2023 President Joe Biden proposed that Congress appropriate $60bn for Ukraine as part of a security bill that would have spent a further $45bn on securing America’s southern border and on arming allies like Israel and Taiwan.

Six months of congressional Sturm und Drang ensued, but nothing has come to the president’s desk. One Republican senator, James Lankford of Oklahoma, spent months negotiating a harder-line compromise on the southern border to accompany the aid package, only for his own party to torpedo it in a matter of three days after its unveiling in February because Donald Trump, the party’s presumptive presidential nominee, rejected it for giving Mr Biden an election-year win. The Senate then passed a $95bn aid bill without any border provisions, which Mr Johnson then rejected and refused to bring up for a vote.

When foreign policy is subordinated to domestic politics, as has happened with Ukraine and Israel, incoherence often follows. You can see this in the short history of Mr Johnson’s own pronouncements. Before he was appointed speaker, Mr Johnson was a Trump-following Ukraine-sceptic, voting against a small $300m military-aid bill in September 2023. In October, after getting the top job, he sounded more supportive, saying that Vladimir Putin must not win. In December he said that this necessary aid must be paired with sweeping reforms to Mr Biden’s border policy, which would be his “hill to die on”. In February, when Mr Biden announced plans to secure the border through executive action after the failure of the bipartisan Senate deal, Mr Johnson denounced them as “election-year gimmicks”—despite having previously called for him to do exactly that. In March he said that he would unveil a new plan for Ukraine aid after Easter.

The eggs have stopped rolling, but Mr Johnson is yet to release his plan, the details of which are not being shared widely. Many of the rumoured components are designed to mollify the isolationists in his party: aid to Ukraine would be labelled as a forgivable loan rather than direct aid (following a suggestion of Mr Trump’s); some of the funding would be recouped by seizing Russian assets that are currently frozen (though many more of these are in the EU than the US); and Mr Biden would have to endure a poke in the eye by overturning his recently announced moratorium on new export projects for liquefied natural gas.

Democrats might grumpily accept even the environmental rollback; the real hindrance to Mr Johnson will be his own party. Marjorie Taylor Greene, a Republican congresswoman from Georgia, has filed a “motion to vacate” Mr Johnson from his leadership, were he to secure Ukraine funding by relying on Democratic support. Ms Greene is probably the most Putin-friendly member of the party—bizarrely saying in a radio interview this week that Ukraine was attacking Christianity while Russia was “protecting it”—but the Republican majority is razor-thin, meaning that a few defectors could cast off Mr Johnson.

Some think that Mr Johnson might simply have to accept that he cannot both arm Ukraine and keep his job. “Then he’ll go down in history as being a profile in courage who does the right thing. We need Winston Churchills right now, not [Neville] Chamberlains,” says Don Bacon, a Republican congressman representing Nebraska. Mr Bacon has been a staunch supporter of Ukraine funding, crafting a so-called discharge petition which could circumvent the speaker and bring a bill directly to the floor for a vote if a majority of House members were to sign on. The discharge petition, which has been closely watched by anxious European diplomats in Washington, is an unconventional parliamentary tool. It is still a long shot, but its existence gives Mr Johnson at least some leverage with his own hardliners.

Critics like Ms Greene are unlikely to be placated. But the cost of congressional dithering is in this case quite real. Last week Sergei Shoigu, Russia’s defence minister, announced that his army had captured 400 square kilometres of territory from the Ukrainians, who have been forced to conserve ammunition (Ukraine is over 600,000 square kilometeres, but the trend is not good). Volodymyr Zelensky, Ukraine’s president, has said that “if the Congress doesn’t help Ukraine, Ukraine will lose the war.”

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Economics

Will Elon Musk’s cash splash pay off in Wisconsin?

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TO GET A sense of what the Republican Party thinks of the electoral value of Elon Musk, listen to what Brad Schimel, a conservative candidate for the Supreme Court of Wisconsin, has to say about the billionaire. At an event on March 29th at an airsoft range (a more serious version of paintball) just outside Kenosha, five speakers, including Mr Schimel, spoke for over an hour about the importance of the election to the Republican cause. Mr Musk’s political action committees (PACs) have poured over $20m into the race, far more than any other donor’s. But over the course of the event, his name came up precisely zero times.

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Economics

German inflation, March 2025

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Customers shop for fresh fruits and vegetables in a supermarket in Munich, Germany, on March 8, 2025.

Michael Nguyen | Nurphoto | Getty Images

German inflation came in at a lower-than-expected 2.3% in March, preliminary data from the country’s statistics office Destatis showed Monday.

It compares to February’s 2.6% print, which was revised lower from a preliminary reading, and a poll of Reuters economists who had been expecting inflation to come in at 2.4% The print is harmonized across the euro area for comparability. 

On a monthly basis, harmonized inflation rose 0.4%. Core inflation, which excludes food and energy costs, came in at 2.5%, below February’s 2.7% reading.

Meanwhile services inflation, which had long been sticky, also eased to 3.4% in March, from 3.8% in the previous month.

The data comes at a critical time for the German economy as U.S. President Donald Trump’s tariffs loom and fiscal and economic policy shifts at home could be imminent.

Trade is a key pillar for the German economy, making it more vulnerable to the uncertainty and quickly changing developments currently dominating global trade policy. A slew of levies from the U.S. are set to come into force this week, including 25% tariffs on imported cars — a sector that is key to Germany’s economy. The country’s political leaders and car industry heavyweights have slammed Trump’s plans.

Meanwhile Germany’s political parties are working to establish a new coalition government following the results of the February 2025 federal election. Negotiations are underway between the Christian Democratic Union, alongside its sister party the Christian Social Union, and the Social Democratic Union.

While various points of contention appear to remain between the parties, their talks have already yielded some results. Earlier this month, Germany’s lawmakers voted in favor of a major fiscal package, which included amendments to long-standing debt rules to allow for higher defense spending and a 500-billion-euro ($541 billion) infrastructure fund.

This is a breaking news story, please check back for updates.

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Economics

First-quarter GDP growth will be just 0.3% as tariffs stoke stagflation conditions, says CNBC survey

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U.S. President Donald Trump speaks to members of the media aboard Air Force One before landing in West Palm Beach, Florida, U.S., March 28, 2025. 

Kevin Lamarque | Reuters

Policy uncertainty and new sweeping tariffs from the Trump administration are combining to create a stagflationary outlook for the U.S. economy in the latest CNBC Rapid Update.

The Rapid Update, averaging forecasts from 14 economists for GDP and inflation, sees first quarter growth registering an anemic 0.3% compared with the 2.3% reported in the fourth quarter of 2024. It would be the weakest growth since 2022 as the economy emerged from the pandemic.

Core PCE inflation, meanwhile, the Fed’s preferred inflation indicator, will remain stuck at around 2.9% for most of the year before resuming its decline in the fourth quarter.

Behind the dour GDP forecasts is new evidence that the decline in consumer and business sentiment is showing up in real economic activity. The Commerce Department on Friday reported that real, or inflation-adjusted consumer spending in February rose just 0.1%, after a decline of -0.6% in January. Action Economics dropped its outlook for spending growth to just 0.2% in this quarter from 4% in the fourth quarter.

“Signs of slowing in hard activity data are becoming more convincing, following an earlier worsening in sentiment,” wrote Barclays over the weekend.

Another factor: a surge of imports (which subtract from GDP) that appear to have poured into the U.S. ahead of tariffs.

The good news is the import effect should abate and only two of the 12 economists surveyed see negative growth in Q1. None forecast consecutive quarters of economic contraction. Oxford Economics, which has the lowest Q1 estimate at -1.6%, expects a continued drag from imports but sees second quarter GDP rebounding to 1.9%, because those imports will eventually end up boosting growth when they are counted in inventory or sales measures.

Recession risks rising

On average, most economists forecast a gradual rebound, with second quarter GDP averaging 1.4%, third quarter at 1.6% and the final quarter of the year rising to 2%.

The danger is an economy with anemic growth of just 0.3% could easily slip into negative territory. And, with new tariffs set to come this week, not everyone is so sure about a rebound.

“While our baseline doesn’t show a decline in real GDP, given the mounting global trade war and DOGE cuts to jobs and funding, there is a good chance GDP will decline in the first and even the second quarters of this year,” said Mark Zandi of Moody’s Analytics. “And a recession will be likely if the president doesn’t begin backtracking on the tariffs by the third quarter.”

Moody’s looks for anemic Q1 growth of just 0.4% that rebounds to 1.6% by year end, which is still modestly below trend.

Stubborn inflation will complicate the Fed’s ability to respond to flagging growth. Core PCE is expected at 2.8% this quarter, rising to 3% next quarter and staying roughly at that level until in drops to 2.6% a year from now.

While the market looks to be banking on rate cuts, the Fed could find them difficult to justify until inflation begins falling more convincingly at the end of the year.

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