Eurozone News
LAST UPDATE: August 28, 2025
French Risk Gauge Hits Seven-Month High as Political Fears Grow
France’s equity volatility index reached a seven-month peak, driven by rising political uncertainty ahead of elections and mounting eurozone instability risks.
Insight
Elevated investor risk sentiment reflects concerns over France’s governance outlook and its spillover impact on broader European markets.
Macron gives ‘full support’ to embattled PM as crisis looms in France
President Macron expressed full support for Prime Minister Bayrou ahead of a confidence vote, urging political responsibility amid a fiscal and political crisis.
Insight
The endorsement demonstrates Macron’s commitment to stability and briefing his cabinet to uphold reforms despite growing parliamentary divisions.
German cabinet agrees steps to boost army recruitment
The German cabinet approved measures to boost voluntary military recruitment, including outreach campaigns, improved pay, and possible fallback to conscription if targets are not met.
Insight
Reflects Germany’s urgent push to strengthen defense capabilities amid rising security threats, while balancing political sensitivity around mandatory service.
Germany creates centralised council to improve security planning
Germany announced a standing National Security Council to enhance medium- and long-term planning, chaired by Chancellor Merz and integrating key ministries.
Insight
The council institutionalizes inter-ministerial coordination and elevates security preparedness, echoing models like the U.S. National Security Council.
German factory outfitters warn of ‘crisis’ from US tariffs
Germany’s machinery federation warned that expanded U.S. tariffs on metal inputs may trigger an existential crisis for equipment manufacturers.
Insight
Highlights the cascading economic risk that U.S. tariff expansion could trigger across German— and European—industrial sectors.
Italy Said to Weigh New €1.5 Billion Bank Tax to Help Budget
The Italian government is considering imposing a €1–1.5 billion tax on banks by limiting their use of deferred tax assets to help finance the 2026 budget.
Insight
This move reflects a pragmatic approach to leveraging the banking sector’s profitability for fiscal consolidation while avoiding market disruption.
Italy to work on ways to permanently cut energy costs, PM Meloni says
Prime Minister Giorgia Meloni announced plans to explore structural solutions for reducing energy costs for Italian households, beyond temporary subsidies.
Insight
The initiative signals a shift toward long-term energy affordability and competitiveness amid rising inflation.
Meloni Seeks Reform to Let Italians Directly Choose Premiers
Prime Minister Giorgia Meloni has revived a proposal for direct election of the prime minister, arguing it would enhance political stability and governance.
Insight
The reform push could reshape Italy’s political dynamics and strengthen executive legitimacy amid coalition challenges.
French Risk Gauge Hits Seven-Month High as Political Fears Grow
The French-German 10-year yield spread reached its highest since January, reflecting heightened investor concern over France’s political stability.
Insight
The widening spread signals market anxiety about a potential political crisis and its economic implications.
Germany creates centralised council to improve security planning
Germany established a permanent National Security Council chaired by Chancellor Merz to coordinate medium- and long-term security strategy.
Insight
The move addresses structural gaps in defense planning brought to light by recent geopolitical threats.
Germany and France Postpone FCAS Fighter Decision to End of Year
Germany and France agreed to delay a decision on the Future Combat Air System fighter program until late 2025, citing need for further alignment.
Insight
The postponement highlights challenges in coordinating ambitious joint defense development across allies.
Italy Said to Weigh New €1.5 Billion Bank Tax to Help Budget
Italy is considering a €1–1.5 billion tax on banks based on deferred tax assets as a measure to support its 2026 budget finances.
Insight
The proposal shows a strategic effort to tap banking sector profits for fiscal consolidation with minimal market disruption.
Italy to work on ways to permanently cut energy costs, PM Meloni says
Prime Minister Meloni said her government is exploring structural measures to reduce energy costs for households, beyond temporary relief.
Insight
The focus on permanent solutions reflects growing emphasis on energy affordability amid inflation and market volatility.
Meloni Seeks Reform to Let Italians Directly Choose Premiers
Prime Minister Meloni proposed a constitutional reform to allow Italians to directly elect the prime minister.
Insight
The reform would strengthen executive legitimacy and could reduce frequent government turnover.
