Europe bulletin: UK growth stalls, Nokia bets big on AI, Ukraine peace talks shift sentiment

Europe’s markets and politics are moving in tandem today, with fresh economic data, major corporate investments, and shifting geopolitical signals shaping the mood.

UK growth has stalled ahead of a closely watched budget, Nokia is betting big on AI infrastructure in the US, European leaders are coordinating on a new Ukraine peace plan, and defense stocks are sliding as investors react to talk of potential de-escalation in the war.

A glance at the major developments in Europe today.

Budget jitters stall UK growth

Growth in UK businesses basically hit the brakes in November, with many companies putting plans on hold as they wait for Finance Minister Rachel Reeves’ upcoming budget.

The S&P Global PMI dipped to 50.5, barely above the 50 line that separates growth from contraction, so things are pretty much flat.

A big reason for the pause? Worries that Reeves might raise taxes again this year.

She’s reportedly looking for an extra £20–30 billion in revenue, largely because the economy’s growing more slowly than expected, borrowing costs are climbing, and previous welfare cuts didn’t deliver the savings hoped for.

Meanwhile, private-sector hiring took a noticeable hit, falling at the fastest pace in four months.

The one silver lining: price pressures eased, which could give the Bank of England enough room to consider cutting interest rates as early as next month.

Nokia’s $4B AI leap

Nokia is making a big move in the US. The Finnish telecom giant just announced a $4 billion investment to push forward AI-powered network technology.

Most of that, about $3.5 billion, is going straight into R&D to build smarter, AI-optimized networks. The remaining $500 million will go toward expanding manufacturing in Texas, New Jersey, and Pennsylvania.

The whole idea is to boost America’s ability to build secure, energy-efficient network infrastructure that can handle the next wave of AI applications.

Nokia’s plan is also part of a broader collaboration with the Trump administration, aimed at strengthening US tech leadership and the economy by upgrading telecom with AI at its core.

Allies rally for Ukraine

The leaders of Germany, France, and the UK got on a call with Ukrainian President Volodymyr Zelenskyy to go over a new US-backed peace proposal, a 28-point plan aimed at ending the war.

During the discussion, they all reiterated that they fully support Ukraine’s sovereignty and long-term security.

They welcomed the US framework as a solid step toward protecting Ukraine’s future, but made it clear that any peace deal has to genuinely reflect Ukraine’s interests and preserve its ability to defend itself.

The group also stressed the importance of staying aligned across Europe and NATO before moving forward with any resolution.

For now, they’ll keep coordinating closely to make sure everyone stays on the same page as peace talks develop.

European defense stocks slide

European defense stocks took a hit after Ukrainian President Zelenskyy signaled he might be open to discussing a US-backed peace plan to end the war with Russia.

The STOXX Aerospace and Defence Index slid to its lowest level since September, and several major names dropped sharply. Germany’s Hensoldt, Renk, and Rheinmetall were down between 5% and 8%, while Italy’s Leonardo and Sweden’s Saab slipped 3% to 4%.

Analysts say the proposed plan includes controversial terms like Ukraine ceding the Donbas region and reducing the size of its military, conditions that Ukraine and its allies aren’t exactly on board with.

Still, the market reacted quickly, selling off defense stocks on the possibility of de-escalation.

Some analysts also noted that while the dip reflects investor nerves, it could end up being an opportunity for those looking to enter the sector, given that geopolitical tensions aren’t going away anytime soon.