EUR News
LAST UPDATE: July 3, 2025
Merz urges EU to strike ‘quick, simple’ tariff deal with US
German Chancellor Friedrich Merz called for a rapid, straightforward agreement with the U.S. on tariffs by July 9 to provide certainty for businesses.
Insight
Merz is pushing for pragmatic and swift resolution, emphasizing stability and investor confidence even if it means deferring complex trade issues.
Starmer Says Reeves Will Stay as UK Chancellor Despite Setbacks
Prime Minister Keir Starmer reaffirmed that Rachel Reeves will remain Chancellor “for many years to come,” despite recent political turbulence and email backlash from her emotional moment in Parliament.
Insight
This statement aimed to stabilize market sentiment after bond yields spiked and Sterling dropped. Starmer’s strong backing signals continuity in the government’s fiscal strategizing.
Starmer Crisis Shows UK Still Lives at Mercy of Bond Market
UK bond yields surged after the government reversed welfare cuts and Starmer initially expressed ambivalence over backing Reeves, prompting investor jitters. Global bond markets reminded the UK that political instability can swiftly translate to market vulnerability.
Insight
The episode highlights how deeply UK politics is tied to bond market confidence. Fiscal credibility is essential—any hint of internal discord or policy reversal is interpreted as risk in capital markets.
UK services sector grows at fastest pace since August, PMI shows
The UK services PMI jumped to 52.8 in June from 50.9 in May, marking the strongest expansion since August 2024. Growth was driven by domestic demand, although firms continued shedding staff amid rising labor costs; exports declined.
Insight
The data suggests sustained consumer-driven growth. Falling price pressure within services supports expectations of another Bank of England rate cut in August. But domestic cost pressures remain a concern.
Swedish services PMI rises to 54.6 points in June – Silf/Swedbank
Sweden’s services PMI climbed to 54.6 in June, up from 50.9 in May, reaching its highest level since October 2022. Increases in new orders and volumes outweighed slower employment and longer delivery times.
Insight
The strong uptick shows robust domestic service demand, bolstering Sweden’s economic outlook. With the Riksbank already cutting rates, policymakers might have room to pause if momentum continues.
Swiss inflation returns to positive territory in June
In June, Swiss consumer prices rose by 0.1% year-on-year, reversing a 0.1% drop in May. Increases were due to costlier holidays, hotels, food, and drink, offsetting cheaper imports amid a strong franc.
Insight
This modest uptick eases deflation concerns and aligns inflation with the SNB’s 0–2% target. It may allow the central bank to hold rates steady after its recent policy normalization.
Turkish Inflation Cools, Keeping Central Bank on Course for July Rate Cut
Consumer price inflation in Turkey cooled from around 37.9% in April to 35.4% in May, signaling continued disinflation amid tight monetary conditions. The central bank, which held its key rate steady at 46% in June, is expected to begin easing at its July 24 meeting.
Insight
The persistent drop in inflation provides room for policymakers to initiate rate reductions, supporting growth while maintaining credibility. However, the bank is likely to proceed cautiously to ensure inflation stays on a durable path.
Romania Pushes Austerity Plan to Cut EU’s Widest Budget Gap
Romania’s government introduced measures combining tax hikes, wage freezes, and possible public-sector job cuts to reduce the budget deficit to under 6% of GDP by 2026, addressing the EU’s largest deficit .
Insight
The austerity package targets fiscal credibility ahead of possible rating downgrades, though it may provoke political backlash. Its success hinges on balancing belt-tightening with social acceptance.
