Eurozone News
LAST UPDATE: June 5, 2025
Germany’s Merz to face Trump in Oval Office on inaugural trip
German Chancellor Friedrich Merz is set to meet US President Donald Trump in Washington, focusing on issues such as NATO defense spending, trade tariffs, and support for Ukraine.
Insight
The meeting represents a critical opportunity to reset US-German relations amid rising transatlantic tensions. Merz’s support for increasing NATO defense spending aligns with Trump’s demands, potentially easing some friction. However, disagreements over trade policies, particularly US tariffs on European goods, remain contentious. The outcome of this meeting could influence the future trajectory of US-EU relations, especially in areas of defense cooperation and economic policy.
German Factory Orders Unexpectedly Climb, Overcoming Tariff Concerns
In May 2025, Germany’s factory orders increased by 1.5%, surpassing expectations and alleviating concerns over the impact of U.S. tariffs. The growth was driven by strong domestic demand and a surge in orders from the eurozone.
Insight
The unexpected rise in factory orders indicates resilience in Germany’s manufacturing sector despite external trade pressures. Strong domestic consumption and intra-European trade appear to be offsetting the negative effects of U.S. tariffs. This development may bolster confidence in the eurozone’s economic stability and suggest that diversification of trade partnerships can mitigate risks associated with protectionist policies. However, continued monitoring is necessary to assess the long-term sustainability of this growth amidst global economic uncertainties.
Irish services sector expands faster in May but outlook remains unclear, PMI shows
Ireland’s services sector experienced accelerated growth in May 2025, with the AIB Global S&P PMI rising to 54.7 from 52.8 in April, driven by a rebound in new business, particularly in technology, media, and telecoms.
Insight
The robust performance of Ireland’s services sector, outpacing the eurozone average, underscores the country’s resilience amid broader regional economic challenges. However, the slowdown in job creation and persistent concerns over global trade tensions highlight underlying vulnerabilities. The decline in sectors like transport, tourism, and leisure for the third consecutive month suggests uneven recovery. Additionally, the finance ministry’s warning about Ireland’s exposure to international tariffs and recent downgrades in growth forecasts indicate potential headwinds. Policymakers may need to implement targeted measures to sustain momentum and mitigate risks.
