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Council tax rise cannot be ruled out, says Reform UK’s top local government figure

Stephen Atkinson rebuffed suggestion his party had made a formal pledge to cut rate during elections earlier this year

Reform UK’s most senior local government figure has said the party did not promise to cut council tax ahead of elections held earlier this year, as his own authority weighs up raising the charge by the maximum amount.

Stephen Atkinson, leader of Lancashire county council, in north-west England, and a vice-chair of the Local Government Association (LGA), refused to rule out an increase of 5 per cent next year due to the huge strain on social care budgets. 

Reform stormed to victory in local elections in May, winning nine English councils and becoming the largest party in three others. 

Leaflets distributed across the country during the campaign on behalf of some leading Reform candidates promised that the party would “cut your taxes”. 

Other material, including social media posts, promised to “reduce the rates”, “reverse tax hikes” or “freeze council tax”. After his win, Leicestershire county council’s leader, Dan Harrison, declared the party would be “able to cut council tax”.

Leaflets making similar promises were sent out as recently as the Nottinghamshire by-election on November 6.

But numerous Reform councils, including its “flagship” administration in Kent, have warned they may have to agree a 5 per cent rise, the maximum allowed without a referendum.

In an interview with the Financial Times, Atkinson rebuffed the suggestion his party had made a formal pledge to cut council tax. 

“We never said that,” he replied, referring to the central office. “I can’t rule out an increase.”

When pressed about local campaign material, Atkinson insisted none of Reform UK’s “official” party leaflets made such a pledge on council tax.

“That [promise] is not sanctioned from head office,” he said. “The head office were very clear that they didn’t put that in. So if someone’s gone rogue . . . that’s not the national party’s position.”

Party leader Nigel Farage has said that local councils are “their own living, breathing organisms” and urged them to keep council tax rises limited to inflation.

Lancashire, like most English councils, is facing a huge shortfall ahead of the budget-setting process next February. They are banking on the government’s “fair funding” review, a shake-up of how central grants are allocated to councils, to help alleviate those pressures. 

But Atkinson said he feared the changes would result in money being “diverted” away from rural areas and put into cities.

The former Conservative district council leader, who defected to Reform in March, said the taxpayer “trying to work two jobs, who hasn’t had a holiday for eight years” was foremost in his mind. Yet he conceded that increasing council tax was a possibility.

Lancashire’s current budget forecasts for next year already assume a 5 per cent council tax rise.

Even with that additional revenue, council officials estimate £75mn in savings will be needed to balance the books.

Atkinson said he blamed central government for the funding crisis affecting English councils due to the introduction of legislation placing additional burdens on overstretched local authorities.

He singled out the Children and Families Act 2014, which has resulted in more children with special educational needs and disabilities (Send) being entitled to support funded by councils.

The legislation around Send provision “needs to be changed”, Atkinson said.

“We currently have 10 pupils in some of the highest fee-paying schools in the country, where I can only dream of sending my children,” he said. “I know one of these cases is costing £93k a year.”

This can happen when a child already enrolled at a fee-paying school has a change in financial circumstances but cannot be moved elsewhere if doing so would be “detrimental” to their wellbeing, he added. 

“If a parent starts paying the fees and then for whatever reason can’t continue, there’s places like Lancashire [council] — when we’ve got old people who can’t put the heating on — having to pay,” Atkinson said.

The council leader added that the cost of transporting Send pupils to school, via taxis or minibuses, was £60mn a year.

“We’re trying to mitigate that by offering grants to parents to take the children to school,” he said. “If I was a parent, I’d take my child to school.”

How Reform performs at a local level is seen as a test of how they could govern if, as polls suggest, they win a majority at the next general election, which must be held before 2029.

This week, Lancashire police met with local councillors following an escalation of complaints over abusive behaviour on social media, including by some Reform members.

Some members of the rightwing populist outfit, locally as well as nationally, have been forced to defend themselves against accusations of racism, including fresh allegations that party leader Nigel Farage made offensive comments as a teenager towards students from ethnic minority backgrounds.

Last month, Lancashire councillor Tom Pickup was suspended by Reform pending investigation over comments he made in a WhatsApp group containing far-right extremist views.

Atkinson, who declined to comment on the suspension, said Reform did not have a greater problem with racism than any other party, pointing to the suspension earlier this year of 11 Labour councillors from Stockport and Tameside, in Greater Manchester, and two MPs over a WhatsApp group containing offensive messages.

“This is a problem across all political parties,” he added. 

The biopharma industry is booming following record investment and improved supply chains

In an industrial suburb of Shanghai, a changing of the guard in drugmaking is unfolding.

Engineers inspect a line of enormous stainless-steel vats where a biologic drug will soon begin production, derived from cells originating in hamster ovaries. With each vat big enough to make 50,000 litres of the medicine, the facility is just one piece of evidence of a biopharma industry boom under way across China.

The plant belongs to BiBo Pharma, which began construction in February and is already a month ahead of schedule, propelled by rapid-fire approvals and hands-on support from the local Lingang district government.

China’s biopharma industry is riding high. A flurry of dealmaking has brought foreign drugmakers to China in search of promising molecules to replenish thinning pipelines. In June, for example, AstraZeneca signed a deal with Chinese biotech CSPC Pharmaceuticals for up to $5.2bn.

Only five years ago, the sector was derided as a laggard for its failure to produce an effective Covid-19 vaccine. Today, western pharmaceutical executives and investors warn privately that their companies risk losing the lead in drug innovation to China.

At the heart of China’s biopharma rise are speed and efficiency — factors that are making drug development not only faster but significantly cheaper. The nation’s advantage stems from a vast, highly skilled workforce: from lab researchers and equipment manufacturers to the labourers bolting BiBo’s new production line into place. While some of this talent has been trained overseas at US universities and at large pharma groups, the bulk of the workforce is homegrown engineers.

A McKinsey report lays out China’s time-and-cost advantage at every stage of drug development. The consultancy estimates that Chinese drugmakers can move two to three times faster than the global average in advancing a target molecule into a drug candidate and into early clinical trials.

Once a therapy passes initial animal tests, patient enrolment for clinical trials in China is two to five times faster, depending on the therapeutic area, thanks to a large patient pool with unmet medical needs.

“In the past three to four years, China has really sped up. It’s one of the most important sources of innovation,” says Peng Jiao, BiBo’s founder and chief executive. He adds that China’s strengths in developing novel medicines lie in fields where the foundational research has already been established, but laboratory work is needed to figure out the right formulations.

“This is more like a puzzle, which requires an engineering rather than a scientific mindset. For this kind of work, you need a highly efficient team that moves very quickly to figure out which way is going to work,” he adds.

Chinese companies can achieve some of this speed and cost saving compared with western rivals due to generous state support. Peng’s factory sits down the road from Tesla’s Shanghai gigafactory, inside an industrial park reserved for biotech start-ups that receive subsidies, cheap rent and start-to-finish assistance from the Lingang authorities.

It took officials just nine days to approve BiBo’s construction plans — a process that can drag on for up to six months in Europe, where Peng is scouting for another manufacturing site.

Peng has manufacturing operations for biologics, medicines derived from living organisms, in both Boston and Shanghai. A decade ago, he says, there was a clear experience gap between his US and China scientific teams. Now, that divide has vanished. His Shanghai staff, he says, are as experienced — and deliver work faster, at a greater scale.

For founders such as Peng, China’s gravitational pull has strengthened. Tapping into the country’s network of supply chains accelerates every stage of the research and development cycle, from discovery to scale-up manufacturing and clinical testing. Shorter timelines improve survival odds for early-stage biotechs, allowing them to test more ideas, kill failures quickly and improve their chances of discovering a blockbuster therapy.

Yet the industry now faces a pivotal question: can China’s rising biotech champions grow into fully global companies capable of competing with the world’s largest pharmaceutical groups? And will increasingly tense geopolitics — particularly with the US, the world’s most profitable drug market — hinder their expansion?

“China’s early-stage R&D is now globally competitive. But for late-stage development — overseas trials, regulatory filings and commercialisation — Chinese firms still have significant room to grow,” says UBS pharma analyst Chen Chen.

“That won’t always be the case,” she adds. By partnering with multinational drugmakers to take products abroad, Chinese biotechs can “secure funding for continued innovation while learning from partners’ strengths in clinical development and commercialisation”.

“Over time, Chinese companies will build their own global capabilities,” she says.

China has steadily climbed the rungs of the global drug supply chain. In the late 1990s and early 2000s, it nurtured a crop of generic drugmakers replicating off-patent medicines.

It then moved into supplying active pharmaceutical ingredients, before becoming a preferred destination for outsourced biotech manufacturing and, later, drug development itself. 

At each step, Chinese clinical research organisations (CROs) and contract manufacturing organisations (CMOs), which develop and manufacture drugs on behalf of biotechs, accumulated expertise in ever more complex scientific and engineering processes.

The progression has turned outsourcing companies such as WuXi AppTec and GenScript into linchpins for drug development not only in China, but for biotech companies worldwide.

“There is a joke in the US biotech industry that if you want to run a study, you ‘just WuXi it’,” says Ashoka Rajendra, founder of Orchestra, a San Francisco-based software platform for biotech companies.

“There is an entire infrastructure in China that is supporting US and European R&D,” he says. “At first, companies would go to China for very specific deliverables, like making DNA or proteins. Then the work moved up the sophistication curve. It wasn’t just tasks with a precise set of instructions, but running studies and generating data.”

Egan Peltan is one such US biotech founder who relies on Chinese suppliers. “Initially, the industry used Chinese CROs because they were cheaper. That is no longer true; their prices are similar. We use them because of the efficiency and time savings,” he says.

For young biotech companies, supplier speed can be existential. “A project that takes a US CRO six to eight weeks would take a Chinese company about three . . . For early-stage companies with no revenue, every day you are waiting is money you have to set on fire,” Peltan says.

Over the past decade, this same knowhow has been redirected from servicing foreign to local clients. China’s biotech sector is experiencing the same evolution seen in automotive manufacturing, consumer electronics and even textiles: from a low-cost outsourcing hub to a source of its own intellectual property. This shift is especially pronounced in biologics and cell therapy, areas that hinge on rapid experimentation and iterative lab work — tasks that are both cheaper and faster to execute in China.

The scale and pace of change may come as a surprise to some, says Zhang Fangning, McKinsey’s partner of life sciences in Greater China. “But the origins of this growth lie in factors that have worked in concert for more than a decade: a steady growth of talent and capital; supportive policies; a robust local supply chain; and the sheer intensity of engineers and scientists who are driving the execution.”

Beijing accelerated this transition by prioritising biotech as a strategic sector both for economic growth and as a means to develop drugs tailored to the ethnic Chinese population.

It introduced reforms in the mid-2010s that made it easier for biotech companies to raise capital and pursue innovation. Hong Kong then loosened stock market listing rules in 2018, enabling pre-revenue companies to list and the resulting wave of biotech IPOs ushered in venture capital investment.

At around the same time, drug authorities in China relaxed clinical trial requirements for certain categories of innovative therapies, making it easier to progress drug candidates.

Rona Therapeutics is one such beneficiary. The Shanghai-based start-up, which plans to list in Hong Kong, specialises in RNA interference therapies that suppress proteins linked to metabolic diseases such as obesity. Founded in 2021, Rona already has 15 drugs in its pipeline, with three undergoing clinical trials. 

“Because the cost of developing a drug is so much lower in China, companies can afford a broader pipeline,” says founder and chief executive Stella Shi. “Where a US company might have to focus on a single asset, Chinese biotechs listing in Hong Kong typically have at least 10 candidates.”

The data reflects that shift. China’s share of global innovative drug candidates in clinical trials has risen from 8 per cent in 2018 to 30 per cent this year, according to McKinsey. Over the same period, the US share has fallen from 47 per cent to 36 per cent.

China’s strengths in biotech are concentrated in fields that demand intensive engineering and high-volume laboratory work to iterate and refine new therapies. This is particularly evident in antibody-drug conjugates (ADCs), so-called “biological missiles” that send chemicals directly to tumours, as well as multispecific antibodies, immune proteins that bind to the surface of cancer cells. McKinsey estimates that Chinese companies account for 54 per cent of innovative ADC assets in phase 1 and 2 clinical trials, and 48 per cent of multispecific antibodies.

Sichuan Biokin, a listed company developing targeted ADC therapies for cancer, has 17 treatments in its pipeline. ADCs drew significant investor enthusiasm in western biotech in the early 2010s, thanks to their potency in killing cancer cells. But many programmes stalled because of the difficulty in controlling toxic side effects.

“ADCs have stronger tumour-killing power. The problem in the 2010s was that no one could solve the toxicity issue,” says founder and chief executive Zhu Yi. He describes the challenge as fundamentally an engineering puzzle: identifying the “right specific technical path” that allows a highly toxic payload to attack cancer cells without damaging healthy tissue.

On this front, he argues, “Chinese companies have a natural advantage” due to the abundant supply of skilled technicians to run rapid-fire experiments and the relative ease of conducting clinical trials.

According to McKinsey, the time it takes to enrol patients in clinical trials in China is about half the global average, and the cost per patient is roughly 50 per cent lower than in the US and Europe.

This efficiency is driven not only by China’s large and ageing population — much of which has limited access to costly therapies — but also by the structure of its hospital system and the ability of patients to learn about ongoing trials through social media and volunteer directly.

China’s growing capabilities have drawn pharmaceutical multinationals to the country to either buy or co-develop innovative drugs. China’s share of out-licensing deals to the US and Europe has risen from 2 per cent in 2018 to 20 per cent this year, according to McKinsey.

This surge in dealmaking has transformed the work of lawyers such as Aaron Gu at Han Kun Law Offices in Shanghai. Five years ago, he mainly advised on deals in which Chinese companies purchased domestic rights to foreign-developed drugs. Now, he works primarily on out-licensing agreements in which Chinese companies sell their homegrown assets to multinational drugmakers.

“For Big Pharma, the deals they are signing in China aren’t a lot of money compared to the future potential revenue from the assets — and the losses that will come from the patent cliff,” he says.

Although he has watched China’s biotech industry mature rapidly, he cautions that it will still take “many years” before its companies grow into global pharmaceutical companies on the scale of Johnson & Johnson or AstraZeneca. No Chinese group ranks among the world’s 20 largest listed pharmaceutical companies by market capitalisation — the top three of which are all American.

Josh Smiley, chief operating officer at Zai Lab, says it will take time for companies in China to develop “systems that contemplate global development. We’re going to continue to see really good innovation come out of China in the next few years. But in many cases, those innovators are going to need a partner to help them with development,” he says.

They must also create international sales forces, navigate foreign regulatory systems and cultivate supply chains outside China, especially as western governments push to create localised manufacturing for critical industries such as pharmaceuticals. For many Chinese biotechs — often unprofitable and with volatile revenue — these investments remain out of reach.

The Beijing-founded BeOne, formerly known as BeiGene, relocated its headquarters out of China, and is widely viewed as the most successful Chinese-founded biotech to build a fully international operation. But that expansion was fuelled by unprecedented funding, totalling several billion dollars, capital not available to other Chinese biotechs.

Still, Sichuan Biokin’s Zhu, is optimistic about the potential for his company to turn into a multinational pharmaceutical company. In 2023, it inked a deal with the US-based Bristol Myers Squibb to co-develop an ADC for solid tumours, including non-small cell lung and breast cancers.

Such partnerships are essential for Chinese biotechs seeking to enter lucrative overseas markets, particularly the US. China’s share of new drugs approved by the US Food and Drug Administration — defined as medicines containing active ingredients not previously approved — has risen from 1 per cent in 2018 to 6 per cent so far in 2025, according to McKinsey.

Chinese regulators drive hard bargains on drug pricing, meaning companies must expand abroad to achieve the profitability needed for long-term growth. “Managing across countries multiplies complexity and resource demands exponentially,” Zhu says. “Partnering with a multinational lets us learn first-hand how global operations work. It’s like having a personal tutor showing you, day by day, how to build a global business.”

Working with larger foreign companies, he adds, has helped Sichuan Biokin understand the organisational structures and capabilities needed to scale. “We mirrored that and learnt by doing. But we have also seen the weaknesses of Big Pharma — the bureaucracy and inefficiency — which has helped us avoid detours as we grow.”

There may be further bumps in the road. In Washington, a growing chorus is warning about China’s rise in biopharma. US lawmakers have sought to restrict reliance on Chinese suppliers of pharmaceutical ingredients as well as CROs and CMOs. In October, a group of senators questioned why pharmaceutical companies were expanding their investments in China and said the industry needed to reshore manufacturing and protect innovation at home.

Governments may decide to intervene directly, says Brad Loncar, an expert on Chinese biotech.

“US and global companies are funding the rise, education and knowledge of China’s biotech sector,” he says. “The Chinese biotech sector is college kids right now. [The US and others] are sending them to college and funding it. But they will graduate one day and be on their own.”

The gym-to-coffee shop womenswear brand from Manchester needs to stretch carefully

When Adanola recruited Kendall Jenner, the US model and media personality, to endorse its leggings and sweatshirts this year, it showed how far the UK athleisure brand has come. This was a formal deal with a bona fide celebrity, not a scattering of Instagram posts by paid influencers.

Kourtney Kardashian, Jenner’s sister, was photographed wearing a sample Adanola tracksuit in the early days of the Manchester brand, eight years ago. But Adanola, known for its affordable clothing in muted colours, is now bigger and more professional. The company has been developing fast under Hyrum Cook, its founder.

Adanola’s revenues are likely to exceed £100mn this year; it has become the latest British athleisure brand to make a financial mark in the global industry after Gymshark, Sweaty Betty and others. The company was valued at $530mn in August with an investment from Story3, a Los Angeles-based private equity fund.

The industry is experiencing turbulence after expanding rapidly during and after the pandemic. Shares in the market leader Lululemon have fallen as consumers have cut back spending, while upmarket rivals such as Alo Yoga and Vuori have gained more attention. Sweaty Betty, the UK brand owned by Wolverine Worldwide, has restructured amid a drop in sales.

But Adanola is on a growth trajectory, helped by its Ultimate Leggings, which Cook launched in 2020 for women stuck at home in the pandemic. They were its breakthrough and remain its best-selling product: it has sold 1.5mn pairs, many in its popular coffee-bean shade. At £40, they are less than half the price of Lululemon’s comparable Wunder Train high-rise tights.

The challenge for Adanola is to grow sustainably in a fickle industry and keep the delicate balance between fashion and function. It aims to be an “everyday uniform” that women wear from gym to coffee shop and beyond. Alongside its leggings, it is known for Varsity sweatshirts with the brand (or just Ada) emblazoned across the chest, as if it were a US college.

Cook is himself an alumnus of Dragons’ Den. He appeared on the BBC investment show with his brother Josh in 2015, securing a £50,000 investment from the judge Deborah Meaden in their social media photo booth company Zeven Media. That went into liquidation, but he was undeterred by this failure. The lesson was “Give it a go, go all in, and if it doesn’t work, try again,” he says. 

Early on, Cook saw an opportunity for Adanola in the blurring line between gymwear and streetwear. The name came from his personal blog, which in turn was a merger of the names of two friends. It was both intriguing and meaningless, allowing the brand to develop broadly.

That proved extremely valuable. Cook is 32 and has controlled Adanola since 2018, having first worked on it with Josh. This year’s annual report records that he sold intellectual property registrations to the company for £50mn, a “valuation determined by the parties involved”. The transaction happened a day before capital gains taxes were raised in the 2024 budget. Cook declined to comment.

Adanola’s sales quadrupled in 2023 and Cook last year appointed Niran Chana, former chief commercial officer of Gymshark, as chief executive to oversee its growth. The company is based in a former clothing warehouse in central Manchester, once a textile manufacturing city known as Cottonopolis. Although it designs clothes there, they are made around the world.

Manchester has experienced the rise and fall of fashion brands including Boohoo, Missguided, and PrettyLittleThing. But Chana says the city remains a supportive place for start-ups, citing the advice and encouragement provided by local companies including Represent and Nadine Merabi. “Manchester people are just nice, they want to help.”

Chana has made Adanola’s supply chain more robust, adding contract factories in Bangladesh, Cambodia, Vietnam and Sri Lanka to those in China and India. It will now distribute through a third-party logistics centre in the US, as well as a UK one. America accounts for only about 10 per cent of sales, but the share is growing.

Adanola knows the danger of becoming fashionable in a hurry and then losing sales. “We’re not a trend-oriented, fashion-led business,” Chana insists. For now, the brand remains on the rise. The trick is not to overstretch. 

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Neither the size nor the composition of the reduction addresses the system’s underlying problems

Opinions differ on the effectiveness of chancellor Rachel Reeves’ Budget. But on one thing almost everyone agrees: UK energy prices are intolerably high. That is something the Budget’s cut to household energy bills has failed to fix. 

Amid a smorgasbord of hits and handouts, annual energy costs for a UK household were reduced by an average of £150. The “typical” gas and electricity bill will fall about 8 per cent due to Reeves ending a scheme to make lower-income households more energy efficient, and moving about three-quarters of the cost of old renewable incentive schemes out of household charges and into general taxation.

At first blush, that may look like good news. After all, £150 is not an insignificant amount. And electricity bills get more relief than gas. That’s sensible given the country’s decarbonisation objectives rely on rolling out heat pumps, electric vehicles and the like. The bad news, however, is that neither the size nor the composition of the cut addresses the UK energy system’s underlying problems.

Take the relative competitiveness of gas and electricity bills. The UK’s new policies reduce the price of electricity more than gas because it was electricity bills that bore the burden of renewable subsidies. But even after that, electricity remains not far off four times more expensive on a per-unit basis than gas, making it very unlikely that more consumers will be nudged into forgoing their boiler.

In terms of the overall cost of electricity, too, the government is fighting a rising tide. The UK is building lots of new transmission lines to bring renewable power to consumers, with an £80bn five-year investment plan up for approval from the regulator.

Over time, costs should slowly fall as new transmission infrastructure cuts the amount of renewable power that goes to waste. But that still leaves UK households with a sticky few years. Rising network costs are one reason why electricity bills in 2030 will be even higher than they are today, according to independent energy analyst Ben James.

One idea to address that hump is to stop charging power stations a carbon tax for burning fossil fuels. After all, the main objective of the charge was to tip the scales from polluting coal to natural gas, which has already been accomplished. Scrapping it would cut the cost of gas-fired electricity by well over 40 per cent, calculates think-tank Aurora Energy. Given that gas so often sets the marginal price for electricity, the measure alone could lop perhaps £60 off household bills, Lex calculates.

Such radical ideas are hard to pursue, not least because they look like compromising on the shift to clean energy. There are more palatable ones, too, like moving even more of the policy burden from electricity bills into general taxation. Such shuffling has benefits beyond window dressing. If electricity can compete with gas, that will increase demand, reducing the impact of infrastructure on consumers’ bills. Since last week’s Budget stops short of either, expect complaints over too-high charges to continue.

Central bank rejects role in European Commission proposal that uses frozen Russian assets

The European Central Bank has refused to backstop a €140bn payment to Ukraine, dealing a blow to an EU plan to raise a “reparations loan” backed by frozen Russian assets.

The ECB concluded the European Commission proposal violated its mandate, according to multiple officials, adding to Brussels’ difficulties in raising the giant loan against Russian central bank assets immobilised at Euroclear, the Belgian securities depository.

It comes amid pressure on the EU to finance Ukraine for the next two years, as Kyiv faces a cash crunch amid a renewed Russian military onslaught and a US peace initiative.

Under the European Commission plan, EU countries would provide state guarantees to ensure the repayment risk on the €140bn loan to Ukraine is shared.

But commission officials said the countries would not be able to raise the cash rapidly in an emergency, and this could put markets under pressure.

The officials asked the ECB whether it could act as a lender of last resort to Euroclear Bank, the lending arm of the Belgian institution, to avoid a liquidity crisis, according to four people briefed on the discussions.

ECB officials told the commission this was impossible, three of these people said.

The ECB’s internal analysis concluded the commission proposal was equivalent to providing direct funding to governments, as the central bank would cover the financial obligations of member states.

This practice, called “monetary financing” by economists, is banned in EU treaties because of evidence it results in high inflation and loss of central bank credibility.

The ECB said “such a proposal is not under consideration as it would likely violate EU treaty law prohibiting monetary financing”.

In response to the ECB’s stance, the commission has begun working on alternative proposals that would provide temporary liquidity to backstop the €140bn loan, according to two officials briefed on the matter.

A commission spokesperson said it had been “in close contact with the ECB” since late October, and the central bank had “participated actively in all the discussions” regarding the loan proposal.

“Ensuring the necessary liquidity for possible obligations to return the assets to the Russian central bank is an important part of a possible reparations loan,” they added.

“This is a must to ensure that the EU, its member states and private bodies can always fulfil its international obligations. Reflections on how to ensure this liquidity in detail are ongoing.”

Euroclear declined to comment.

The EU has frozen Russian assets worth about €210bn since Russia’s full-scale invasion of Ukraine in 2022.

Belgium has opposed the loan to Kyiv on the grounds that in the event the Russian assets were unfrozen and Moscow was able to reclaim them, Euroclear would not be able to repay the money immediately.

Belgium’s prime minister Bart De Wever has said the EU plan is “fundamentally wrong”, and demanded the bloc’s other 26 member states sign up to “legally binding, unconditional, irrevocable, on-demand, joint and several guarantees” to share the risk of repaying the loan.

He wants such a commitment before EU leaders gather on December 18 for a summit that is meant to decide how the bloc should continue funding Kyiv.

De Wever argues the member state guarantees and some form of backstop are required in case the EU sanctions that keep the Russian assets immobilised are suddenly annulled.

The sanctions have to be rolled over every six months through a unanimous decision. Some countries, including Hungary, have argued against renewal.

The US push for a peace deal between Russia and Ukraine, and alternative proposals from the Trump administration for use of Moscow’s immobilised assets, have raised concerns across the EU.

Belgium is particularly worried a potential peace agreement struck between Washington and Moscow could negate the EU sanctions and force Euroclear to repay Russia immediately.

Under the commission’s proposal, Ukraine would only have to repay the money if Russia agreed to pay reparations to Kyiv.