Eurozone News
LAST UPDATE: June 12, 2025
Irish economy entered 2025 in strong position – IMF
The IMF reported that Ireland began 2025 with solid growth, supported by robust domestic demand, strong investment, and favorable labor market conditions—but cautioned on external vulnerabilities.
Insight
While the upbeat IMF assessment highlights resilience and policy effectiveness, it also draws attention to risks stemming from global trade tensions and multinational profit repatriation.
Lithuania to sign technical assistance deal with IMF to cut VAT gap – finmin
Lithuania’s Finance Minister said the country will partner with the IMF on VAT compliance, aiming to reduce the VAT gap through data analysis tools and policy enhancements.
Insight
This proactive move demonstrates Lithuania’s commitment to fiscal transparency and efficient tax collection. Collaboration with the IMF can serve as a model for other EU countries facing similar challenges.
ECB Says Its Rate Cut Can Prop Up Inflation
ECB Chief Economist Philip Lane stated that recent rate cuts are intended to prevent inflation from dropping below the 2% target, particularly in light of cooling from energy prices and a stronger euro.
Insight
The policy reflects prudence in navigating deflation risks while inflationary pressure subsides. The ECB is balancing stimulus with vigilance to sustain target inflation.
ECB’s Simkus Says It’s Important to Take a Pause on Rates
ECB Governing Council member Gediminas Simkus noted that policymakers face “very big uncertainty” and suggested pausing rate moves after the recent cuts.
Insight
Simkus’s call for caution points to growing recognition of external headwinds—such as trade tensions—suggesting the ECB may shift to a wait-and-see mode.
ECB’s Villeroy Says No Fixed Position on Future Rate Decisions
ECB Governing Council member François Villeroy de Galhau emphasized that future interest-rate decisions will be data-dependent, with no pre-set path.
Insight
Villeroy’s stance signals the ECB’s flexibility and responsiveness in a volatile environment, keeping policy reactive to evolving economic conditions.
ECB’s Villeroy says France can limit budget deficit to 5.4%
Banque de France Governor Villeroy de Galhau projected that France will cap its budget deficit at 5.4% in 2025, aligning with official targets despite a downgrade in growth forecasts.
Insight
The statement underscores that France can maintain fiscal discipline even amid economic slowdown—enhancing credibility with EU institutions and bond markets.
German economic institutes raise growth forecasts
Four major German economic institutes raised 2025 growth projections to around 0.3–0.4%, citing Q1 recovery, €46 billion in tax cuts, and a €500 billion infrastructure plan.
Insight
This upgrade reflects optimism driven by fiscal stimulus, though persistent export and tariff risks mean gains may remain modest.
Bulgarians Are Getting the Euro, But Half of Them Don’t Want It
Bulgaria is set to adopt the euro in January 2025, but a recent survey shows that about 50% of the population opposes the change, citing fears over inflation and loss of financial sovereignty.
Insight
The strong public skepticism highlights a disconnect between political/technical readiness and popular support, posing risks to social cohesion and trust in the transition process.
