EUR News
LAST UPDATE: May 28, 2025
EU countries agree to exempt most firms from carbon border tariff
The European Union has agreed to scale back its carbon border tariff, exempting about 90% of importers by applying the levy only to companies importing over 50 metric tons annually of high-emission goods.
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This move aims to reduce administrative burdens on small businesses while maintaining environmental objectives, as the remaining 10% of importers account for over 99% of the emissions covered. The decision reflects a balance between environmental policy and economic practicality, potentially setting a precedent for other regions considering similar measures.
EU Seeks Companies’ U.S. Investment Data as It Pushes for Trade Deal
The EU has requested major European business groups to collect updated data on their members’ U.S. investments to expedite trade negotiations with the Trump administration, following the postponement of a proposed 50% tariff on EU imports.
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By gathering detailed investment data, the EU aims to highlight the significance of transatlantic economic ties, potentially influencing the U.S. stance in trade talks. This proactive approach underscores the EU’s commitment to preserving strong economic relations with the U.S., despite recent trade tensions.
EU ministers approve new 150b euro arms fund
EU ministers have approved the creation of a €150 billion arms fund, named the Security Action for Europe (SAFE), to bolster European defense capabilities amid concerns about potential Russian aggression and diminishing U.S. security assurances.
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The establishment of SAFE marks a significant step towards EU defense integration, reflecting a strategic shift in response to geopolitical uncertainties. By financing joint defense projects and emphasizing a “buy European” clause, the fund aims to strengthen the EU’s defense industry and reduce reliance on external security guarantees.
IMF nudges up UK’s 2025 growth forecast, sees ‘significant risks’ to deficit goals
The IMF has slightly increased the UK’s 2025 growth forecast to 1.2%, citing strong GDP performance in the first quarter, but warns of significant risks to achieving fiscal deficit goals due to global borrowing pressures and economic uncertainty.
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While the growth upgrade is a positive sign, the IMF’s caution highlights the challenges the UK faces in maintaining fiscal discipline. The government must navigate economic headwinds, including inflation and high debt costs, to achieve its deficit reduction targets, necessitating careful policy planning and execution.
IMF urges Reeves to rein in power of OBR
The IMF has suggested that UK Chancellor Rachel Reeves should modify the mandate of the Office for Budget Responsibility (OBR) to focus solely on assessing the likelihood of meeting fiscal rules, aiming to reduce pressure from intense scrutiny on fiscal headroom.
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This recommendation indicates a need to recalibrate the balance between fiscal oversight and policy flexibility. By narrowing the OBR’s focus, the government could alleviate constraints on fiscal policy-making, allowing for more responsive economic strategies while still maintaining accountability.
UK turns to shorter-term borrowing as fiscal pressure mounts
Amid mounting fiscal pressures and a global debt sell-off, the UK government is strategically shifting toward issuing shorter-term debt to reduce interest costs.
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The UK’s move to favor short-term borrowing reflects an attempt to manage rising interest costs and investor demand dynamics. While this strategy may offer immediate fiscal relief, it increases exposure to refinancing risks and market volatility. The shift also indicates challenges in sustaining long-term investor confidence, potentially impacting the country’s financial stability.
Italy’s Meloni calls for completion of EU capital markets union
Italian Prime Minister Giorgia Meloni has urged the European Union to expedite the completion of its capital markets union to prevent capital flight and strengthen the bloc’s financial integration.
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Meloni’s call emphasizes the need for deeper financial integration within the EU to enhance economic resilience and competitiveness. Completing the capital markets union could facilitate cross-border investments, improve access to financing for businesses, and reduce dependency on external financial centers. This initiative aligns with broader efforts to fortify the EU’s economic architecture amid global uncertainties.
Swiss inflation could go negative, SNB focused on medium term, Schlegel says
Swiss National Bank Chairman Martin Schlegel stated that inflation in Switzerland might turn negative in the coming months, but the central bank will focus on medium-term price stability rather than short-term fluctuations.
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The SNB’s emphasis on medium-term stability over immediate reactions to potential deflation reflects a cautious approach to monetary policy. While negative inflation could prompt expectations of rate cuts, the central bank’s stance suggests a commitment to long-term economic health. This strategy may help maintain investor confidence and avoid hasty policy shifts that could destabilize markets.
Bulgaria says it is back on track to adopt euro in 2026
Bulgaria has announced it is back on course to adopt the euro in 2026, following previous delays due to political instability and high inflation.
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Bulgaria’s renewed commitment to euro adoption signifies progress in meeting EU convergence criteria, particularly in stabilizing inflation. Joining the eurozone could enhance Bulgaria’s economic integration with the EU, attract foreign investment, and provide greater monetary stability. However, public concerns about potential price increases and loss of monetary sovereignty may pose challenges to this transition.
Hungary Holds Key Rate Steady With Focus on Anchoring Inflation
The National Bank of Hungary maintained its benchmark interest rate at 6.5% for the eighth consecutive month, focusing on anchoring inflation expectations amid persistent price pressures.
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Hungary’s decision to keep interest rates steady reflects ongoing concerns about inflation, despite signs of economic slowdown. The central bank’s cautious stance aims to prevent inflation from becoming entrenched, which could undermine economic stability. This approach indicates a prioritization of price stability over short-term growth, highlighting the challenges policymakers face in balancing these objectives.
Hungary central bank chief: there are still ‘warning signs’ in domestic inflation
Hungary’s central bank governor Mihaly Varga warned that despite recent declines, there are still “warning signs” in domestic inflation, necessitating a cautious monetary policy stance.
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Varga’s remarks underscore the persistent risks associated with inflation in Hungary, suggesting that the central bank remains vigilant in its efforts to maintain price stability. The acknowledgment of ongoing inflationary pressures indicates that any potential easing of monetary policy will be approached with caution. This perspective reinforces the central bank’s commitment to ensuring long-term economic stability.
Trump Ally Wades Into Poland’s Election, Endorsing Nationalist
U.S. Homeland Security Secretary Kristi Noem urged Poles to vote for the nationalist opposition candidate in Sunday’s presidential election, highlighting the transatlantic conservative alliance.
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Noem’s endorsement reflects the growing involvement of U.S. conservatives in European politics, aiming to bolster nationalist movements abroad. This move underscores the interconnectedness of right-wing agendas across the Atlantic and may influence Poland’s political landscape, potentially affecting its relations with the EU and NATO.
