EUR News
LAST UPDATE: June 2, 2025
Czech growth helped by investment, exports, tariffs cloud outlook, central bank says
In the first quarter of 2025, the Czech Republic’s economy grew by 2.2% year-on-year, slightly surpassing the central bank’s forecast of 2.1%. This growth was primarily supported by resilient investments and exports. However, household consumption—the main driver of growth—rose only by 2.5%, falling short of the anticipated 3.3%. Despite a year-on-year decline in investment, it grew on a quarterly basis, and exports remained stronger than expected. The central bank cautioned that some of this strength might result from firms stockpiling in anticipation of rising trade barriers, particularly due to looming U.S. tariffs. It warned that both investments and exports could be significantly affected if large tariffs are implemented. Nevertheless, strong household spending is expected to sustain a full-year economic growth rate of approximately 2% for 2025.
Insight
The Czech economy’s modest growth reflects a delicate balance between domestic consumption and external trade factors. While investments and exports have provided a boost, the threat of new tariffs introduces uncertainty that could dampen future performance. The central bank’s warning about potential impacts underscores the interconnectedness of global trade policies and domestic economic health. To maintain growth, the Czech Republic may need to explore strategies to mitigate external risks, such as diversifying trade partners and enhancing domestic demand.
Poland says it has financed about 69% of its 2025 gross borrowing needs
Poland’s finance ministry announced that it has secured approximately 69% of its gross borrowing needs for 2025, amounting to 269.6 billion zlotys ($68.3 billion), through various funding sources.
Insight
Poland’s proactive approach to securing a significant portion of its borrowing needs early in the fiscal year demonstrates prudent fiscal management amid global economic uncertainties. By front-loading its financing, Poland reduces exposure to potential market volatility and interest rate fluctuations. This strategy also provides the government with greater flexibility to implement economic policies and respond to unforeseen expenditures. However, maintaining fiscal discipline and ensuring efficient allocation of borrowed funds remain critical to sustaining economic stability.
Punch-ups and tobacco pouches: Polish presidential race gets personal
The Polish presidential race has taken a personal and contentious turn as frontrunner Rafal Trzaskowski of the centrist Civic Coalition contrasts his transparency with the controversies surrounding nationalist opponent Karol Nawrocki. Nawrocki, backed by the opposition Law and Justice party, has faced media scrutiny over his alleged past conduct, including participating in organized fights and a disputed property acquisition from an elderly man. He denies wrongdoing and dismissed the reports as media lies, offering to donate the flat to charity. A minor scandal also erupted when he used a tobacco pouch during a live debate. Despite these issues, Nawrocki’s support remains strong, with 99% of his first-round voters backing him in polls for the runoff. Sociologists point to political polarization and Nawrocki’s relatable background as reasons for voter loyalty. Meanwhile, Trzaskowski has faced questions about campaign spending. The election’s outcome could significantly impact Poland’s direction—aligning with EU norms under Trzaskowski or veering along a conservative path akin to Donald Trump’s policies under Nawrocki. Voter opinions remain deeply divided, reflecting broader societal rifts.
Insight
The intensely personal nature of Poland’s presidential race highlights the deep political and cultural divisions within the country. The controversies surrounding both candidates have shifted focus from policy debates to character assessments, potentially influencing voter perceptions and turnout. Nawrocki’s ability to maintain strong support despite negative press suggests a solidified base that prioritizes ideological alignment over personal conduct. The election’s outcome could have significant implications for Poland’s domestic policies and its relationship with the European Union, depending on the direction chosen by the electorate.
Trump’s mixed signals on Russia cloud European strategy
European countries, aiming for deeper economic sanctions to push Russia into a ceasefire in Ukraine, struggle with US President Donald Trump’s ambivalent attitude on the issue. Trump has expressed impatience—accusing Russian President Vladimir Putin of “playing with fire”—and made threats, but does not seem to follow them up with action.
Insight
Trump’s inconsistent stance on Russia has created uncertainty among European allies. While he publicly criticizes Putin, his reluctance to implement concrete measures undermines collective efforts to pressure Russia. This ambiguity complicates the formulation of a unified European strategy, potentially weakening the West’s position in negotiations and prolonging the conflict in Ukraine. The lack of decisive action from the US may embolden Russia and strain transatlantic relations.
UK finance minister nominates budget watchdog chief for second term
British finance minister Rachel Reeves announced her nomination of Richard Hughes for a second five-year term as chair of the Office for Budget Responsibility (OBR). The OBR is responsible for producing biannual forecasts on the UK’s economic growth and public borrowing, playing a crucial role in evaluating whether the government’s fiscal policies are meeting established budgetary goals. Hughes’ reappointment will require approval from the House of Commons’ Treasury Committee.
Insight
The reappointment of Richard Hughes signals continuity in the UK’s fiscal oversight amid economic uncertainties. His leadership at the OBR has been pivotal in providing independent analyses that inform government policy. Maintaining experienced oversight is essential for investor confidence and fiscal discipline. However, the effectiveness of the OBR also depends on the government’s willingness to heed its assessments, especially in times of economic stress.
Romania aims to sell domestic debt worth 5.8 bln lei in June
Romania’s finance ministry aims to sell domestic treasury bonds and bills worth 5.8 billion lei in June, including 705 million lei at non-competitive tenders.
Insight
Romania’s plan to issue significant domestic debt reflects its efforts to finance budgetary needs amid economic challenges. The reliance on domestic markets suggests a cautious approach to external borrowing, possibly due to global financial uncertainties. However, the success of these auctions will depend on investor confidence and the country’s fiscal policies. Ensuring transparency and economic stability will be crucial to attract and maintain investor interest.
Turkey’s Erdogan repeats opposition to interest rates, but says economic programme to continue
Turkish President Tayyip Erdogan reiterated his strong opposition to interest rates during a speech at the Global Islamic Economy Summit in Istanbul, reaffirming his stance against what he describes as an interest-based economic system. Despite these views, Erdogan affirmed his commitment to continue implementing Turkey’s current economic program, designed by Finance Minister Mehmet Simsek, which aims to curb inflation and stabilize the currency.
Insight
Erdogan’s ideological opposition to interest rates contrasts with the pragmatic measures being implemented to stabilize Turkey’s economy. This dichotomy may create policy inconsistencies, potentially confusing investors and markets. While the continuation of the economic program indicates a commitment to reform, Erdogan’s rhetoric could undermine these efforts. Balancing ideological beliefs with economic realities remains a significant challenge for Turkey’s leadership.
