Eurozone News
LAST UPDATE: June 18, 2025
ECB Has Found ‘Equilibrium’ on Rates, Prices, Growth, Stournaras Says
ECB Governing Council member Yannis Stournaras stated that the euro area appears to have reached a “balance” across interest rates, inflation, and economic growth, though further rate cuts may be data-dependent
Insight
The ECB is cautiously pausing its easing cycle to assess economic risks, signaling a pragmatic “wait and see” stance amid uncertainty.
ECB Says It Launched Single Collateral Management System
The ECB rolled out a unified collateral management platform (ECMS) on June 16, replacing 20 separate national systems to streamline cross-border liquidity within the euro area
Insight
ECMS modernizes financial infrastructure, enhancing efficiency and resilience of euro-area operations—a key milestone in monetary integration.
Germans Must Work Longer, Bundesbank Says in Swipe at Government
The Bundesbank has urged reforms including linking retirement age to life expectancy and removing incentives for early exit, warning that 4.8 million Germans will retire by 2035—potentially shrinking the workforce 9%—while 27% of the federal budget is allocated to pensions .
Insight
The central bank stresses that without longer working lives and structural pension reforms, Germany risks fiscal strain and labor shortages—challenging government’s modest tax-based incentives.
Slovakia wants defence spending rise spread over at least 10 years, president says
Slovakia’s President Zuzana Čaputová said on June 17 that any increase in defence spending should be gradual, stretched over at least a decade, to avoid hampering economic stability .
Insight
The long-term approach highlights fiscal prudence in small states seeking security assurances, reflecting caution in balancing defence obligations with sustainable public finances.
PM Fico says neutrality would benefit NATO member Slovakia
Prime Minister Robert Fico argued on June 17 that Slovakia’s military neutrality could enhance its NATO membership by enabling it to host forces rather than committing combat troops .
Insight
The statement introduces tension between Slovakia’s NATO obligations and domestic neutrality preferences, reflecting a unique hybrid defence posture in the alliance.
Ireland to remove €500,000 pay cap for AIB, PTSB
On June 17, Finance Minister Paschal Donohoe announced the removal of the €500,000 annual pay cap for executives at AIB and Permanent TSB, following the state’s sale of its remaining shares in AIB. The cap had already been lifted for Bank of Ireland when it returned to full private ownership in 2022. (lse.co.uk)
Insight
The policy change reflects Ireland’s move to align bankers’ pay with private sector standards and prevent talent drain, but it risks public criticism over executive compensation.
Portugal commits to four years of budget surpluses despite uncertainty
On June 17, Finance Minister Joaquim Miranda Sarmento pledged to deliver budget surpluses from 2025 to 2028 and reduce public debt from 94.9% to 91.5% of GDP. This stands in contrast to forecasts from the Bank of Portugal, which predicts deficits in 2025–27.
Insight
The commitment underscores a strong stance on fiscal discipline amid global uncertainty, though the clash with central bank projections raises questions about political credibility and execution.
