Mercedes-Benz chief executive Ola Källenius has warned that excluding British manufacturers from European industrial preference rules would damage automotive production on both sides of the Channel, increasing pressure on Brussels ahead of negotiations over its proposed Industrial Accelerator Act.

The head of Mercedes-Benz has warned that excluding British manufacturers from the European Union’s proposed industrial preference rules would damage the competitiveness of carmakers across Europe, challenging Brussels over legislation intended to protect European production from growing international competition.

Ola Källenius, chief executive of Mercedes-Benz and president of the European Automobile Manufacturers’ Association (ACEA), criticised the prospect of restricting British participation in the forthcoming “Made in Europe” framework during discussions in Brussels on Wednesday, 14 October.

His intervention comes as European governments negotiate the Industrial Accelerator Act, which would introduce European-content requirements affecting public procurement and certain forms of industrial support.

The proposed legislation is intended to strengthen manufacturing within the EU, but its treatment of production in neighbouring countries has become contentious, particularly in an automotive industry whose factories and suppliers operate across national borders.

European production extends beyond the EU

British manufacturing remains closely integrated with continental European automotive production despite the United Kingdom’s departure from the single market.

Components manufactured in Britain are incorporated into vehicles assembled in EU member states, while British factories depend on engines, batteries, electronics and other parts produced in continental Europe.

The value of this integrated manufacturing system depends on companies being able to source components across borders without unnecessary restrictions.

Källenius warned that excluding the UK from the proposed rules would weaken manufacturers operating on both sides of the Channel.

His position reflects industry concerns that a narrowly defined European-content regime could impose additional costs on companies already facing pressure from Chinese competition, slowing demand and substantial investment requirements.

As EU Today reported in September, British Prime Minister Andy Burnham has been pressing Brussels to recognise the UK as a trusted industrial partner under the emerging framework.

Germany has also supported a broader approach that would allow selected trading partners to qualify under European-content rules where reciprocal conditions are met.

France has favoured stronger preferences for production within the EU itself, reflecting differences among member states over how far European industrial policy should extend beyond the Union’s borders.

A dispute over industrial sovereignty

The Industrial Accelerator Act proposed by the European Commission is intended to strengthen Europe’s manufacturing base and support production in strategically important sectors.

Its provisions address public procurement and industrial incentives affecting products including vehicles, steel, aluminium and clean technologies.

The Commission wants European public spending to support local industrial capacity rather than reinforce dependence on imports from major international competitors.

China has become the principal focus of those concerns because of its expanding manufacturing capacity, particularly in electric vehicles and batteries.

However, measures designed to counter Chinese industrial competition could also affect established trading partners whose manufacturers form part of European supply chains.

The United Kingdom, Norway, Switzerland and Turkey occupy different legal positions in their economic relations with the EU, but all maintain important industrial connections with member states.

An approach that treats their production as equivalent to imports from countries with substantially different market conditions could require European companies to reorganise existing supplier relationships.

For manufacturers, replacing a supplier may involve more than simply ordering components from another factory. Production standards, technical certification, logistics and long-term investment arrangements can make changes expensive and difficult.

Industry demands regulatory certainty

Following an ACEA board meeting on Wednesday, European manufacturers called for faster progress on the wider automotive legislative package.

In its 14 October statement, ACEA urged EU institutions to advance negotiations so that the package could be finalised early next year.

The association argues that manufacturers require a predictable regulatory framework to plan investments in electric vehicles, production facilities and new technologies.

Källenius linked the industry’s transition towards zero-emission mobility with the need to preserve employment and strengthen economic security.

European manufacturers are simultaneously investing heavily in electrification while competing against Chinese companies with established battery supply chains and significant production capacity.

The resulting financial pressures are particularly serious for manufacturers that must develop new vehicle platforms while maintaining existing factories and dealer networks.

Additional restrictions on component sourcing could complicate those decisions at a time when companies are seeking to reduce costs.

Britain refuses to follow EU tariffs automatically

The dispute has acquired a further dimension following remarks by British Business Secretary Jonathan Reynolds.

Speaking on Wednesday, Reynolds indicated that Britain would not automatically follow the European Union in imposing tariffs on Chinese vehicles.

The UK government maintains that trade measures must be determined according to British economic interests rather than adopted simply to align with Brussels.

That position complicates London’s attempt to secure favourable treatment under European industrial rules.

EU policymakers have argued that closer alignment on trade defences could support Britain’s claim to be treated as a trusted partner.

British ministers, however, must consider whether restrictions on Chinese imports would benefit domestic manufacturers and consumers.

The disagreement will form part of the broader economic relationship being discussed ahead of the next UK–EU summit, scheduled for 20 November.

The wider implications for EU–UK relations

The automotive dispute follows earlier negotiations over British participation in European defence procurement and other industrial programmes.

In both cases, London wants access to initiatives designed to strengthen European production while remaining outside the EU’s institutional framework.

Brussels must determine how far preferential treatment can extend to non-member countries without undermining the objectives of its industrial policy.

The Commission’s proposals have already revealed disagreements between governments favouring a tightly defined European manufacturing base and those seeking to preserve wider commercial partnerships.

Källenius’s intervention strengthens the argument that industrial protection cannot be considered separately from the supply chains on which European manufacturers depend.

The final legislation will influence investment decisions, procurement arrangements and the position of British suppliers within the continental automotive industry.

The outcome will also provide an indication of how far the EU is prepared to accommodate its closest trading partners as it attempts to strengthen European manufacturing against growing competition from China.

EU finance ministers have approved a compromise that would expand the European Securities and Markets Authority’s powers while exempting some major trading venues from centralised oversight. The agreement reflects continuing resistance to transferring financial supervision from national authorities to Brussels.

European Union finance ministers have reached an agreement to expand centralised supervision of financial markets, but Germany has secured provisions allowing important parts of Deutsche Börse to remain under national oversight, substantially narrowing the European Commission’s original reform proposals.

The compromise, agreed at a meeting in Luxembourg on 9 October, would transfer responsibility for supervising selected trading venues, clearing houses and securities settlement institutions to the European Securities and Markets Authority (ESMA).

However, the agreement introduces exemptions and thresholds that reduce the number of institutions automatically subject to direct European supervision.

The result is a significant political compromise between governments seeking deeper financial integration and those reluctant to surrender oversight of nationally important market operators.

Berlin secures its exemption

The most contentious element of the negotiations concerned Deutsche Börse, the German financial-market group that operates the Frankfurt stock exchange and provides trading, clearing and other financial infrastructure services.

Germany opposed arrangements that would place all major market operators under direct ESMA supervision, arguing that institutions with predominantly domestic activities should continue to be regulated nationally.

The agreed compromise refines the criteria for determining which trading venues qualify for centralised oversight.

These conditions allow certain Deutsche Börse operations to remain outside the new supervisory regime.

The exemption had already become a point of contention during negotiations among European governments.

As EU Today reported in June, Berlin had sought to protect Deutsche Börse from mandatory European supervision despite Germany’s broader support for integrating EU capital markets.

The October agreement formalises a narrower approach within the Council’s negotiating position, although the legislation remains subject to approval by the European Parliament.

Europe’s fragmented financial markets

The European Commission has repeatedly argued that fragmented national supervision weakens the EU’s ability to compete with financial markets in the United States.

Although the Union operates a single market, many financial institutions continue to face differing regulatory interpretations, procedures and supervisory relationships across member states.

These differences can increase operating costs and discourage financial businesses from expanding across borders.

The Market Integration and Supervision Package is intended to simplify those arrangements and strengthen common oversight of financial infrastructure with significant cross-border activity.

Under the Council’s position, ESMA would assume direct supervision of selected trading platforms and institutions involved in clearing and securities settlement.

Such institutions perform essential functions in financial markets, including managing transactions, transferring securities and controlling risks between counterparties.

Differences in supervisory arrangements can complicate the operation of financial services that increasingly function across national borders.

The Commission argues that greater consistency would allow European capital to move more efficiently between member states and provide businesses with improved access to investment.

Compromise reduces original ambitions

The Commission’s original approach envisaged broader centralisation of supervisory responsibilities.

The Council agreement of 9 October introduces more restrictive criteria governing the institutions that would fall under ESMA’s direct authority.

In addition to the treatment of trading venues, ministers agreed that direct supervision of crypto-asset service providers should initially concentrate on businesses with the most significant cross-border operations.

The Council also supported changes to ESMA’s governance arrangements, including the creation of a full-time executive board.

The proposed board would strengthen the authority’s ability to make supervisory decisions independently of individual national regulators, while preserving mechanisms for cooperation with those authorities.

The compromise also introduces arrangements allowing national supervisors collectively to challenge certain decisions.

These provisions reflect concerns about concentrating regulatory powers within an institution that must oversee financial businesses operating under different national legal systems.

Why capital markets matter for European investment

The supervision reforms form part of the EU’s broader Savings and Investments Union initiative.

European policymakers want to increase the availability of private capital for companies investing in technology, defence, infrastructure and industrial development.

The Union has substantial household savings, but much of that money remains in bank deposits or is invested outside the European economy.

Companies seeking capital for expansion may consequently face higher financing costs or more limited investment opportunities than comparable businesses operating in larger and more integrated markets.

The Commission’s Savings and Investments Union programme seeks to improve access to finance and make cross-border investment more attractive.

Financial-market supervision represents only one element of that programme.

Differences in taxation, insolvency law, national investment products and corporate governance requirements also influence where investors allocate their money.

Nevertheless, regulators regard consistent supervision as an important condition for reducing fragmentation.

Parliament faces a political decision

The agreement reached by finance ministers does not conclude the legislative process.

The European Parliament must adopt its position before negotiations can determine the final provisions.

Parliamentary discussions could revisit the exemptions secured by Germany and the criteria determining which institutions fall under direct ESMA supervision.

The debate will expose differences over whether European financial integration should proceed through incremental reforms or a more substantial transfer of regulatory authority.

Governments supporting national exemptions argue that supervision should reflect the actual geographic scope of a company’s activities.

Supporters of broader European oversight contend that major trading businesses can influence financial markets beyond their home jurisdictions even when individual operations appear predominantly domestic.

The Deutsche Börse exemption has become a prominent example of the conflict between those positions.

Europe’s largest economies broadly support the objective of deeper capital markets, but remain divided over the institutional powers needed to achieve it.

The final legislation will determine whether the expanded responsibilities granted to ESMA are sufficient to reduce fragmentation or leave important parts of Europe’s financial infrastructure operating under substantially different national supervisory systems.