EUR News
LAST UPDATE: July 1, 2025
IMF cuts growth economic forecast for Switzerland, highlights trade risks
The IMF cut its Swiss 2025 growth forecast to 1.3%, down from 1.7%, citing weakening exports and rising trade-related uncertainties, particularly from potential U.S. tariffs.
Insight
The Swiss economy, reliant on high-value exports, is vulnerable to tariff-driven shocks. The downgrade signals broader risk from global trade fragmentation.
IMF Backs Swiss Bank Reform Push Amid UBS Capital Standoff
The IMF voiced support for Swiss government efforts to require stronger capital buffers at UBS, following concerns raised during recent financial stability reviews. UBS has pushed back against what it views as excessive requirements.
Insight
The IMF’s backing underscores international concern over “too-big-to-fail” banks and Switzerland’s systemic exposure. It adds pressure on UBS and signals global alignment toward stricter capital rules.
SNB says negative interest rates remain an option
The Swiss National Bank confirmed that negative interest rates are still a tool in its policy arsenal, even as inflation remains low and the Swiss franc faces upward pressure.
Insight
This signals that the SNB remains flexible amid fragile global conditions. While rates are currently at zero, market volatility or deflation risks could prompt renewed easing.
Swiss Manufacturing Jumps on Hope for Tariff Deal With US
Bloomberg
Swiss manufacturing PMI surged to 49.6 in June—up from 42.1 in May—as the sector anticipates a trade resolution with the U.S. ahead of the July 9 tariff deadline.
Insight
The strong PMI bounce shows manufacturers are optimistic that tariff relief could revive European industrial activity. However, the recovery depends critically on reaching a timely deal.
EU wants upfront relief for key sectors in any US trade deal, sources say
Brussels is pushing for immediate tariff relief on sensitive sectors (such as autos, semiconductors, pharmaceuticals) as part of any interim trade deal with the U.S., even while accepting a universal 10% baseline tariff until final agreement.
Insight
The demand highlights the EU’s negotiation stance: accepting some tariffs but seeking targeted early wins to protect key industries while broader deal-making continues.
Japan Business Sentiment Improves Despite Tariffs
According to the BOJ’s Q2 Tankan survey, large manufacturers’ sentiment rose to +13 in June (vs. +12 in March). Firms reported stronger long-term capex plans—up 11.5% for fiscal 2026—despite ongoing U.S. tariffs.
Insight
The increase suggests domestic business resilience. Manufacturers are adapting by passing costs onto consumers and maintaining investments. However, profit margin expectations were trimmed and firms foresee near-term pressure from global trade tensions. Mixed results from non-manufacturers highlight growing structural trade risks.
Blow for Thailand’s government as court suspends PM from duty
Thailand’s Constitutional Court suspended PM Paetongtarn Shinawatra pending a petition over alleged improper comments—marking a shock to the governing alliance.
Insight
The ruling intensifies political instability, potentially opening the door to early elections and underscoring the enduring tension between the judiciary, military, and political coalitions.
EXPLAINER—Thailand’s political chaos: what happens next?
Overview of Thailand’s turmoil: with the PM suspended, options include caretaker administration, military intervention, or new elections, amid public protests and elite maneuvering.
Insight
The explainer emphasizes that Thailand’s political landscape is entering a volatile phase. The outcome depends on coalition cohesion, military response, and protest strength.
BoE’s Bailey stresses weakening labour market, hit to economy from uncertainty
Bank of England Governor Andrew Bailey highlighted signs of a weakening labour market and noted that prolonged economic uncertainty—such as trade and tariff tensions—is weighing on UK businesses.
Insight
Bailey’s comments suggest the BoE may delay interest rate increases due to unfolding economic pressures. The central bank appears to be shifting its focus toward supporting jobs amid global trade headwinds.
Starmer’s Welfare Overhaul Hangs in Balance Ahead of Key Vote
Prime Minister Keir Starmer’s flagship welfare reforms, which include tightening eligibility and increasing work incentives, face a critical Commons vote this week after sparking debates within his own party.
Insight
The vote will test Labour’s solidarity and ideological balance. A narrow margin or backbench dissent would expose internal divisions, complicating the implementation of welfare policy.
