EUR News
LAST UPDATE: June 25, 2025
EU Prepares to Retaliate If US Imposes Baseline Tariffs on Bloc
The EU is preparing retaliatory tariffs—potentially including heavy U.S. goods like Boeing aircraft—if the U.S. imposes baseline tariffs (~10%) on EU exports after the early July negotiation deadline.
Insight
The EU is signaling readiness to escalate trade defenses aggressively, using tariff threats as leverage to achieve a more equitable deal. This underscores rising trade friction in transatlantic relations.
Heavy industries to get power price relief under new EU rules, draft document shows
An EU draft rule would permit member states to subsidize electricity costs for energy-intensive industries, aiming to protect their global competitiveness amid high energy prices. The support would be temporary and conditional on state-aid approval.
Insight
This reflects Europe’s effort to balance competitiveness with its green agenda. Short-term cost relief may preserve industrial jobs, but raises concerns about long-term decarbonisation incentives and aid fairness.
EU’s von der Leyen: The Europe of defense has finally awakened
EU Commission President Ursula von der Leyen declared Europe now operates as a serious defence actor, highlighting post-Ukraine investments and EU member-state unity in defence initiatives.
Insight
Von der Leyen’s statement marks Europe’s strategic pivot toward defence autonomy. While complementary to NATO, it signals growing confidence in EU’s collective security role.
NATO Cash Bonanza May Become Europe’s Lost Chance for Growth
Bloomberg Economics warns that Europe’s planned surge in defence spending (~€100 bn) could yield minimal economic payoff (~0.1–0.2 ppt GDP boost over 3 years) if investments don’t prioritize R&D and domestic supply chains.
Insight
The concern is that military outlays could crowd out critical R&D and green spending. Without strategic investment, Europe may sacrifice long-term competitiveness for short-term security gains.
BOE QE Decision ‘More Interesting This Year,’ Bailey Says
Bank of England Governor Andrew Bailey noted that this year’s decision on quantitative tightening—specifically the speed and timing of bond sales—will be “more interesting,” as the BoE conducts an internal review ahead of a potential September decision. (bloomberg.com)
Insight
Bailey’s language signals a key shift: while the BoE previously focused on rate policy, QT is now rising in importance. The review could reshape the BoE’s exit strategy from QE, balancing market stability and inflation control.
BoE’s Bailey sees more signs of softening labour market
Andrew Bailey highlighted emerging signs of weakening in the UK labour market—slowing wage growth and reduced pay settlements—suggesting early-stage labour market cooling.
Insight
Labour market softening is a key rationale for potential rate cuts. If sustained, it could allow the BoE to shift from neutral to easier policy while keeping inflation expectations anchored.
UK government launches group to tackle sovereign debt in developing economies
The UK has launched the London Coalition on Sustainable Sovereign Debt to bring together the government and private sector to strengthen debt sustainability and transparency in developing countries, particularly in Africa. It aims to reform debt contracts, include natural disaster clauses, and promote fair restructuring.
Insight
The coalition indicates a strategic UK move to enhance its financial services prominence post‑Brexit, while addressing global sovereign debt vulnerabilities and advocating legal reforms alongside development conferences.
UK’s Starmer vows to press on with welfare reforms despite opposition
Prime Minister Keir Starmer has insisted he will proceed with planned welfare reforms—including cuts to sickness-related Universal Credit and PIP—despite opposition from over 100 Labour MPs who argue the measures will hurt disabled people.
Insight
Starmer’s resolve highlights tensions between fiscal consolidation and social support within Labour, showing potential strain on party unity as it balances sustainability with electoral appeal.
Poland to freeze energy prices for households until end 2025, PM says
Prime Minister Donald Tusk announced that electricity prices for households will be frozen until the end of 2025, protecting consumers amid high global energy costs.
Insight
The freeze reflects electoral sensitivity and an effort to shield households, but may postpone necessary market reforms and shift future inflation pressure.
Turkey taking crypto transaction steps to hinder laundering, Simsek says
Turkey announced new anti–money‑laundering regulations for crypto: enforcing the “travel rule”, imposing 48–72 hour withdrawal delays, and setting stablecoin caps of $3,000 daily and $50,000 monthly.
Insight
The measures signal Turkey’s intent to regulate crypto rigorously, aligning with international AML norms and potentially improving its grey‑list standing while affecting crypto market liquidity in Turkey.
Hungary central bank says tight rate policy needed despite ailing economy
According to a Reuters poll ahead of the May 27, 2025 policy meeting, Hungary’s central bank is expected to keep its base rate at 6.5% for the eighth consecutive month. Despite weak GDP growth (around 1% vs previous forecasts of 1.9–2.9%), the bank emphasizes it cannot ease policy until inflation expectations are firmly anchored (reuters.com).
Insight
The bank is prioritizing price stability over economic recovery, underscoring its commitment to combat inflation despite growth headwinds. This approach maintains credibility but risks undermining recovery, given stagnating growth and investor withdrawals—highlighted by German firms curtailing plans in Hungary .
