Eurozone News
LAST UPDATE: June 13, 2025
German ministry warns trade uncertainty could weaken economy
The German Economy Ministry cautioned in its monthly report that ongoing uncertainty surrounding U.S. trade policy—particularly tariffs—remains elevated and could threaten Germany’s fragile economic recovery. Despite stabilization in consumer spending, weakening foreign trade may impede further growth (tradingview.com).
Insight
This illustrates Germany’s deep trade dependence on the U.S. and the susceptibility of its export-driven economy to policy volatility. Even with strong domestic consumption, persistent tariff risk could offset recovery efforts and delay a sustained growth rebound.
High oil prices due to Israeli strikes on Iran would hurt German economy, DIW says
Germany’s DIW institute warns that rising oil prices from the Israel–Iran strike could undermine consumer confidence and derail the modest 0.3% growth forecast .
Insight
Germany’s fragile recovery is energy-sensitive: price surges would hit households directly and risk stalling the economic rebound, even amid strong infrastructure investment.
German inflation confirmed at 2.1% in May
Germany’s harmonized consumer inflation eased slightly to 2.1% y/y in May from 2.2% in April .
Insight
The cooling inflation provides policymakers breathing room and supports the case for monetary easing or at least maintaining interest rates. Continued stability could foster further economic normalization.
French consumer inflation confirmed at +0.6% in May
France’s consumer prices rose 0.6% year-on-year in May, the slowest rate since January 2021, due to falling energy costs and slower service inflation .
Insight
This disinflation trend bolsters the case for ECB rate cuts, reduces pressure on households, and may provide room for fiscal support without inflation risks.
Spain’s 12-month EU‑harmonised inflation in May at 2%
Spain’s harmonised inflation was 2.0% in May, near the ECB target and slightly above preliminary estimates, with core inflation at 2.2% .
Insight
Spain’s inflation stability supports economic recovery and gives the ECB confidence in maintaining or easing monetary policy—though core inflation suggests vigilance may still be warranted.
Spain’s debt‑to‑GDP ratio falls to 103.5% in first quarter 2025
Spain’s public debt declined to 103.5% of GDP by the end of March, down from around 106% a year earlier, reflecting fiscal consolidation as growth continues (marketscreener.com).
Insight
This reduction signals progress in Spain’s efforts to rein in debt following pandemic-era spending. While still above the EU’s 60% threshold, sustained growth and prudent budgeting may enable further debt reduction, easing fiscal constraints for future investment.
