EUR News
LAST UPDATE: June 3, 2025
EU says it will make strong case for US tariff cuts this week
The European Commission announced plans to advocate for the reduction or elimination of U.S. tariffs during high-level meetings this week, despite U.S. President Donald Trump’s recent statement indicating a doubling of steel and aluminum tariffs to 50%.
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The EU’s proactive approach aims to de-escalate trade tensions and avoid a potential tariff war that could harm both economies. Engaging in diplomatic discussions reflects the EU’s commitment to resolving disputes through negotiation rather than retaliation. However, the looming threat of increased tariffs poses risks to transatlantic trade relations. The outcome of these talks will be pivotal in determining the future trajectory of EU-US economic interactions and may set precedents for handling similar disputes globally.
EU science advisers put clamp on carbon credits to meet 2040 climate target
The European Scientific Advisory Board on Climate Change advised the EU to exclude international carbon credits from its 2040 climate targets, recommending a 90-95% cut in greenhouse gas emissions from 1990 levels through domestic reductions.
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This recommendation emphasizes the importance of genuine emission reductions within the EU rather than relying on external offsets, which may lack credibility and effectiveness. The board’s stance challenges member states like Germany and France, which have shown interest in incorporating international credits. Adopting this advice would reinforce the EU’s leadership in climate action and ensure more transparent and accountable progress toward climate goals. However, it may also require significant policy adjustments and increased investment in domestic emission reduction initiatives.
EU restricts Chinese medical devices in retaliation against ‘Made in China’
The European Union has decided to restrict Chinese medical device manufacturers from participating in public procurement contracts exceeding €5 million for five years, citing China’s discriminatory practices favoring domestic suppliers.
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This action marks the first application of the EU’s International Procurement Instrument, reflecting growing trade tensions between the EU and China. The EU’s investigation revealed that 87% of Chinese public tenders for medical devices exhibited bias against foreign suppliers, aligning with China’s “Made in China 2025” strategy to prioritize domestic production. China’s response criticized the EU’s move as contradictory to its principles of market openness. This development underscores the EU’s commitment to protecting its industries and ensuring fair trade practices, potentially influencing future trade negotiations and policies between the two economic powers.
UK must spend £68bn to modernise military, defence review suggests
A strategic defence review recommends the UK invest £68 billion to modernize its military, focusing on advanced technologies and increased defence spending.
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The review emphasizes the need for the UK to enhance its military capabilities in response to evolving global threats, particularly from Russia and China. Key recommendations include investments in drones, AI, new nuclear warheads, F-35 fighters, and advanced submarines under the Aukus alliance. The government aims to raise defence spending from 2.3% to 2.5% of GDP by 2027, with a long-term goal of 3%. While these investments are crucial for national security, they may strain other public services, necessitating careful budgetary planning.
Bank of England’s Mann says QT impact needs to be reconsidered
BoE policymaker Catherine Mann suggests reevaluating the effects of quantitative tightening (QT) on the UK’s monetary and financial conditions.
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Mann highlights that as the BoE reduces interest rates, it’s essential to assess how QT influences different parts of the yield curve and monetary policy transmission. She warns that rising long-term yields cannot be fully offset by lowering overnight rates, which could conflict with efforts to address structural issues in labor and product markets. Additionally, continued QT might reduce financial system reserves, leading banks to rely more on BoE liquidity operations. The central bank is expected to review its QT policy in September, with potential adjustments to its pace.
PM Zhelyazkov Tells IMF Managing Director Euro’s Adoption Marks New Chapter for Bulgarian Economy
Bulgarian PM Rosen Zhelyazkov discusses the country’s upcoming euro adoption with IMF Managing Director Kristalina Georgieva, highlighting anticipated economic benefits.
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The transition to the euro is seen as a significant step for Bulgaria, promising increased investor confidence, more investments, and broader economic opportunities. PM Zhelyazkov emphasizes that adopting the euro will usher in a new chapter for the Bulgarian economy, enhancing its integration into the European financial system. The move is expected to facilitate trade, reduce currency exchange risks, and attract foreign direct investment, contributing to the country’s long-term economic growth.
Revved-Up Polish Assets Dip as Election Erodes Pro-EU Tilt
Polish financial assets decline following the unexpected election of nationalist Karol Nawrocki as president, raising concerns over the country’s EU alignment.
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Nawrocki’s victory signals a potential shift in Poland’s political landscape, with implications for its relationship with the EU. Investors fear that his nationalist stance may hinder pro-EU reforms, jeopardizing access to EU funds and affecting trade agreements. The election outcome introduces uncertainty into Poland’s economic policies, leading to a dip in stocks and bonds. Market participants will closely monitor the new administration’s actions to assess the future trajectory of Poland’s economic and foreign policies.
Poland’s new president puts EU billions and trade goals at risk
The election of nationalist Karol Nawrocki as Poland’s president threatens the country’s access to over €137 billion in EU funds and complicates trade agreements.
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Nawrocki’s presidency poses challenges to Prime Minister Donald Tusk’s pro-EU reform agenda, particularly judicial reforms crucial for unlocking EU funds. His nationalist rhetoric and potential vetoes could stall reforms, leading to a re-freezing of funds and hindering Poland’s economic progress. Additionally, his alignment with other Eurosceptic leaders may bolster an anti-EU bloc in Eastern Europe, affecting the region’s political dynamics. The situation underscores the delicate balance between national politics and EU relations, with significant implications for Poland’s future.
Polish central bank seen keeping rates steady on Wednesday
The National Bank of Poland (NBP) is expected to maintain its key interest rate at 5.25% during its upcoming meeting on Wednesday, following a 50 basis point cut in May—its first since October 2023.
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The decision to hold rates steady reflects a cautious approach amid wage volatility and inflation risks, such as rising electricity tariffs after October. While core inflation is moderating and economic growth remains positive, the NBP aims to balance these factors against potential inflationary pressures. Governor Adam Glapinski emphasized that the May cut did not signal the start of an easing cycle, and further rate reductions in June were unlikely. However, some analysts anticipate a potential resumption of easing in the third quarter.
Romanian President Dan says new government can be formed within two weeks
President Nicușor Dan aims to form a new government within two weeks, focusing on fiscal reforms to address Romania’s significant budget deficit.
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Following his recent electoral victory, President Dan is working to establish a coalition government comprising pro-European parties. The urgency stems from Romania’s pressing need to implement fiscal measures to reduce its EU-leading budget deficit. Potential Prime Minister Ilie Bolojan has indicated that spending cuts alone may not suffice, suggesting that tax increases could be necessary. The formation of a stable government is crucial to restore investor confidence and prevent a credit rating downgrade. The administration’s ability to enact effective fiscal policies will be pivotal in stabilizing the economy.
Romania Injects More Funds to Banks as Market Shortage Narrows
Romania’s central bank has injected additional liquidity into domestic banks for the second consecutive week to alleviate money market shortages.
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The central bank’s actions aim to stabilize the financial system amid political uncertainty and economic challenges. The liquidity injections are a response to capital outflows and increased borrowing costs following recent elections. These measures are intended to ensure sufficient funding for banks, support credit flow, and maintain financial stability. However, sustained interventions may indicate underlying vulnerabilities in the banking sector. The effectiveness of these measures will depend on broader economic reforms and the establishment of a stable government.
