BRUSSELS — Ryanair has accused rivals Lufthansa and Air France-KLM of trying to ground the low-cost carrier by alleging that its ownership structure violates EU rules.

The two legacy airlines, which face growing competition from budget carriers, belong to the European Network Airlines Association, a lobby group that has filed a legal challenge over Ryanair’s share ownership.

“Now they’re in the Irish High Court seeking to have our license suspended and Ryanair grounded,” Ryanair CEO Michael O’Leary said Thursday in Brussels.

The association confirmed to POLITICO that it has spent months urging EU and Irish aviation authorities to investigate whether Ryanair complies with the bloc’s ownership and control rules.

Under those rules, airlines must be majority-owned and effectively controlled by EU nationals or entities to hold an EU operating license. ENAA argues that Ryanair no longer meets those requirements, pointing to the airline’s March announcement that only 30% of its shares are held by EU nationals. O’Leary, an Irish citizen, holds 4% of the stock.

When the Irish Aviation Authority seemed “reluctant to engage on the matter,” ENAA took the matter to court. If Ryanair loses the case, it could be forced to change its ownership structure. The carrier’s operating license would only be suspended if it does not comply with the verdict.

Ryanair has rejected the allegations, arguing that its non-EU shareholders do not have voting rights, which means the airline is under EU control.

In an emailed statement, Ryanair accused its rivals of attempting “to restrict competition and choice for EU air travel” by challenging its operating license.

Grounding risk seen as remote

Augusto Viansson Ponte, a London-based director at Alton Aviation Consultancy, doubted that the legal case would be easily dismissed, but also said it was unlikely that Ryanair would lose its operating license.

“ENAA’s request is sufficiently well-founded to justify examination, but it is way too early to say that Ryanair is violating the rules,” he said.

Regardless of the legal outcome, Viansson Ponte said that a “likely first step would be corrective measures, not immediate grounding.”

Even if the court rules against the budget airline, Ryanair would have several options to address any compliance problems, the analyst said. 

“Ryanair could restrict non-EU [share] purchases, facilitate transfers of shares to EU investors, implement targeted share buybacks or restructure its licensed subsidiaries for example,” he said, adding that the process “should be manageable” for the airline.

Enemies in court, friends in Brussels

Despite their spat, Ryanair, Lufthansa and Air France-KLM all belong to the Brussels-based Airlines for Europe (A4E) lobby, and all are pushing for a reform of the Air Services Regulation, which sets the rules for operating in the EU, including ownership and control.

The lobby’s members jointly support providing “more flexibility … and tackle the risks linked to this change,” they said in feedback to the Commission.

“The potential way forward is to allow institutional investors from selected third countries to hold a limited percentage of shares … which would count towards the EU share of ownership,” the joint position adds. 

If EU lawmakers adopt the proposal, “that would allow a greater access to liquidity in those markets for airlines,” said easyJet CEO Kenton Jarvis, whose company is set to be acquired by U.S. investment firm Apollo.

However, the legal battle between the Irish budget airline and legacy carriers may fracture A4E. O’Leary threatened on Thursday at an A4E press conference to leave the lobby group unless the legal case is dropped by the end of the year. 

A4E later acknowledged that its members “may have differing views on certain issues, [but] we share a common interest in advancing our collective work for the benefit of European passengers, particularly in an increasingly complex and costly regulatory environment.”

Neither Lufthansa nor Air France-KLM commented on O’Leary’s threat to leave A4E.

The growing popularity of far-right parties across Europe is sparking worries in NATO that they could weaken public support for rearmament and military aid to Ukraine as risks grow of a confrontation with Russia.

In France, Italy, Belgium, Germany, Poland and Romania, these parties are looking to turn voters’ cost-of-living concerns into opposition to aid for Kyiv, and rejection of higher national defense budgets and a greater role for the EU in defense — although each party has often sharply diverging views on those issues.

France’s National Rally leader Marine Le Pen last month called for limiting aid to Ukraine, saying: “financially, we can’t do it anymore.”

Roberto Vannacci, a former general and MEP who leads the far-right National Future party, which is increasingly challenging Prime Minister Giorgia Meloni, called for a rethink of defense spending. “Let’s evaluate whether this military spending is justified: in my opinion, it isn’t, especially at a time when commodity prices are hitting record highs,” he said last week.

The challenge for Europe’s mainstream parties is how to sustain support for higher defense budgets even if that means competing with welfare and other priorities.

“People are struggling with the rising cost of living across the board … so there’s room for populistic rhetoric about how much should we support Ukraine financially, or how much should we invest in defense,” said Janne Kuusela, permanent secretary at Finland’s defense ministry.

The dilemma is sharpening as several large NATO members, including France, Italy and Poland, face elections in 2027, when far-right parties stand a real chance of coming to power. Many countries are also beginning talks on next year’s budgets.

For NATO, a spending slowdown would complicate efforts to meet the alliance’s target of spending 5% of GDP on defense and security by 2035. Four NATO diplomats, granted anonymity to speak freely, said the risk is a growing concern, though some said its effects may not be clear until next year’s budget cycle.

“We’re already in a situation where we need to catch up” with Russia, said a NATO military official. “So far, we’re on a positive trajectory — if someone closes the faucet, there’s a risk of losing capabilities.”

Turning the tide

European countries and Canada are expected to spend $634 billion on core defense needs this year, an 11% hike relative to 2025. But public support has limits.

In eight European countries, an average of 46.2% of respondents said they would not back higher defense spending if it meant higher taxes, while 35.5% were in favor, according to an August poll assessed by the European Council on Foreign Relations and shared with POLITICO. More people were opposed to increasing taxes to finance military spending in Germany, France, Italy, Spain and Poland. Respondents in the Netherlands, Sweden and the U.K. were more likely to accept higher taxes for military spending.

Protests against higher defense spending have taken place in Rome, Brussels and Madrid this year, with demonstrators criticizing cuts to funding for hospitals, universities and social services.

Support for Ukraine is declining as well, according to NATO’s internal polling from this spring, falling from 59% in 2025 to 55% this year, with lethal aid the least popular form of support.

Far-right pushback on defense varies across Europe and falls broadly into three categories: opposition to military aid for Ukraine; rejection of EU-level defense projects; and criticism of defense spending more broadly. Yet all threaten to halt the continent’s effort to rearm rapidly and jointly — and limit Russia’s aggression against Ukraine.

France’s National Rally and Romania’s Alliance for the Union of Romanians oppose aid to Kyiv. Poland’s Law and Justice and the Dutch Party for Freedom resist EU-level defense projects. Alternative for Germany and Italy’s National Future criticize increased spending more broadly.

The right’s political foes warn that opposition plays into the Kremlin’s hands. “The pressure from the right doesn’t actually come from the right, but largely from Moscow,” German Defense Minister Boris Pistorius said. Parties such as National Rally and the AfD have longstanding ties with Russia, though they have sought to shake off their links in recent years.

Defense spending pressure

The political risk varies by country. Le Pen is a front-runner to become French president, while the AfD has made gains at the regional level but is unlikely to take national office soon.

Far-right gains are putting centrist parties under pressure to defend higher spending or consider cuts to retain public support.

“There is a risk that the formally pro-European mainstream across Europe might be too timid to spend … as would be necessary on defence,” said Paweł Zerka, senior policy fellow at the ECFR.

While Le Pen’s National Rally has indicated that she would respect France’s current trajectory of increasing military spending, Italy’s Meloni last week proposed spending €8 billion less on defense than the government’s initial proposal amid pressure from her far-right coalition partner, the League. Meloni last week proposed spending €8 billion less on defense than the government’s initial proposal amid pressure from her far-right coalition partner, the League.

“You can’t spend on weapons what you can’t spend on pensions, excise tax relief, or utility bills,” Claudio Borghi, a League senator, said last week.

In Poland, President Karol Nawrocki, backed by the right-wing Law and Justice party, tried but failed to block access to nearly €44 billion in EU SAFE defense loans, saying the scheme risked making Poland dependent on Brussels and saddling future generations with debt.

Pressure to rethink defense spending could make it harder for NATO members to fund the capabilities officials say are needed to deter Russia, as capitals begin talks this month on determining the alliance’s war plans, which are due by 2029.

A slowdown by larger members such as France and Italy would have broader effects because they account for a greater share of defense investment and aid to Kyiv, one of the NATO diplomats said.

“If bigger countries stop making progress, then NATO will stop making progress,” the diplomat said. “You weaken NATO, you weaken Europe’s ability to defend itself, and you make Ukraine … more vulnerable.” 

It could also affect the sum earmarked for defense in the EU’s next long-term budget if talks stretch on into next year, said Guntram Wolff, a senior fellow and defense economics analyst at the Bruegel think tank.

“Nationalists are all only interested in their country, they don’t want to work together with other European countries,” said German lawmaker Marie-Agnes Strack-Zimmermann, who chairs the European Parliament’s defense committee.

This article has been updated.

BRUSSELS — Germany’s push to exempt a national champion from future EU oversight could imperil a ministerial deal to integrate the bloc’s financial markets and compete with Wall Street.

Over the coming days, finance ministers will discuss the most contentious parts of their countries’ positions on Brussels’ “market integration and supervision package” of bills, or MISP. They’ll begin with a dinner on Thursday in Luxembourg, as the Council moves toward its official negotiating position.

The hope is that ministers will then sign off on the compromise deal, brokered by Ireland in its role as leader of the EU’s rotating presidency, at the ministerial Ecofin gathering on Friday. This would be a major step forward for the EU’s 10-year bid to create a U.S.-style capital market.

But a push by Germany to exclude one of Europe’s biggest stock exchanges from central EU oversight could turn dinner into a food fight.

This exemption remains in the current compromise position among EU capitals after Berlin refused to give up local supervision of its stock exchange behemoth Deutsche Börse over fears of job losses and ceding power to a bloc-wide entity, despite central supervision being one of the key tenets of the MISP package.

It’s sparked protests from smaller countries, which feel the compromise would disproportionately benefit their larger neighbors — and could scupper the entire deal.

The carveout is “polluting the whole debate” by giving a “huge gift to Germany” while other countries receive nothing in return for their support, one diplomat said.

Another went further. “No deal is better than a bad deal,” a senior EU official said ahead of Friday’s meeting.

One market

Securing a deal on MISP this year is central to the “One Europe, One Market” plan that the EU’s three political leaders in Brussels agreed to in April. EU governments have invested significant political capital into MISP in a bid to turn the bloc into an investment hub where innovative companies can find investors without having to leave for deeper pockets on Wall Street.

Getting sign-off from the EU’s 27 governments would be a major coup for Dublin, which is chairing legislative negotiations in Brussels until the end of the year.

However, six diplomats close to the negotiations gave contrasting views on whether a deal would be possible this week. According to one, anywhere from eight to 17 countries could band together to block an agreement.

The diplomats did concede that the countries opposing the carveout are not unified in their position, however, as they all want different things from a potential deal. But the Deutsche Börse issue remains the most contentious.

After the German government made it clear it would not support a deal on the package unless Deutsche Boerse was carved out, the EU’s six biggest economies came up with a plan over the summer to exempt the exchange from EU-wide supervision by the new “supercop” European Securities and Markets Authority.

The German state of Hesse, Deutsche Boerse’s current supervisor, has consistently opposed giving up the role, fearing job losses and waning influence if the exchange giant is instead overseen by ESMA. The carveout, based on trading thresholds and geographical footprint, would also benefit Spain’s main stock exchange and another German trading platform, Tradegate.

In practice, scoping out the German giant would hollow out the ambition of the MISP plan. Moving to a central supervision model for the EU’s biggest exchanges and other financial plumbing firms like clearinghouses and central securities-depositories has been the thorniest political issue throughout negotiations.

Although ESMA would still oversee large firms such as the stock exchange group Euronext and Nasdaq’s European arm, the watchdog would have fewer staff and less funding, and ultimately be less powerful if it were not responsible for supervising Deutsche BBörse 

The Belgian government in particular isn’t taking the plan lying down. According to two diplomats close to the talks, Belgium’s prime minister, Bart De Wever, could raise the subject at the European Council later this month if a majority of ministers push the carveout through.

Central to the Belgians’ frustration is the fact that their finance giant, the securities-depository group Euroclear, will move to ESMA supervision, while Belgium was shut out of talks among the “E6” supergroup of the bloc’s largest economies, according to multiple diplomats involved in the group’s formation.

If big countries won’t give up the Deutsche Börse carve-out, small countries could win changes to ESMA’s governance structure in exchange for supporting a deal, according to three of the diplomats. They want national finance watchdogs to have more influence in ESMA’s decision-making, while some also want changes to the authority’s funding structure. Large countries want ESMA to be overseen by an independent, powerful executive board akin to the European Central Bank’s. 

“It’s MESS, not MISP,” one diplomat quipped to POLITICO. 

Giovanna Faggionato contributed reporting.

DUBLIN — Ireland will create a new national savings system to spur tax-free investments in stocks and bonds, the government announced Tuesday as the centerpiece of its next tax-cutting budget.

The measure is designed to woo at least some of the more than €170 billion currently resting in Irish savers’ bank accounts, most of which is earning paltry rates of interest, into riskier investments with much higher potential returns.

The move represents Ireland’s national riposte to pressure from several other European Union countries to boost consumer investment in stocks and bonds on a union-wide basis. Ireland is among the EU members resistant to creating a proposed “Savings and Investments Union” regulated from Brussels, not Dublin.

Presenting his 2027 budget, Finance Minister Simon Harris told lawmakers that residents would be able to open Irish Investment Accounts starting in July. He said individuals could use those accounts to invest in stocks, bonds and exchange-traded funds (ETFs), many of which are listed on the Dublin stock exchange, via a list of state-approved banks and brokers.

The first €50,000 in each account would not be taxed, while any balances above that would be charged 1% on the excess amount, he said. This means a fund valued at €100,000, for example, would face an annual tax liability of €500.

Under the plan, most investors would take a few years to grow their accounts to the €50,000 threshold. Annual contributions to each account would be capped at €12,000, Harris said, underscoring the center-right government’s aim to spur investment by middle-class savers, not the wealthy.

This approach, he said, “strikes a balance between encouraging small-scale investment, while ensuring that those with greater means continue to make a fair contribution.”

Investment firms offered a muted welcome, noting that Harris’ regime retained significant disincentives.

“Today was the government’s chance to get Ireland investing, and it has missed it,” said Michael Healy, chief executive of online trading and investment platform IG Consumer.

Healy dismissed Ireland’s plans as “fundamentally flawed,” as they will tax all balances above €50,000, regardless of whether they have recorded any gains that year. “Someone could face a tax bill even when their investments have fallen in value — effectively paying tax on losses,” he said.