Eurozone News
LAST UPDATE: June 11, 2025
Spain to See Slowest Quarterly Growth in Two Years, Central Bank Forecasts
The Bank of Spain forecasts 0.5–0.6% growth for Q2, the slowest in two years, while lowering the annual projection to 2.4% due to U.S. trade tensions.
Insight
This slowdown signals the rising vulnerability of Spain’s economy to external shocks like global trade volatility. The downgrade from 2.7% to 2.4% emphasizes that headwinds from U.S. tariffs are dampening export-driven recovery. With peripheral economies sensitive to global trade shifts, Spain’s reliance on EU-wide stimulus and structural investment becomes more critical. Continued sluggish growth may prompt the central bank to reassess its policy outlook amid fragile market dynamics.
Italy industry output rises in April as long slump eases
Italian industrial production rebounded in April following a prolonged decline, driven by increased demand in machinery and automotive sectors.
Insight
The rebound suggests Italy’s industrial base is regaining momentum, potentially signifying recovery following weak growth phases. Stronger machinery and auto production reflects improving domestic confidence and global demand. However, whether this is sustainable remains to be seen amid broader EU economic headwinds and structural challenges such as public debt and low productivity. The data will be scrutinized for signs of durable recovery ahead of the upcoming EU economic cycle assessments.
Italy’s referendum flop bolsters Meloni, reveals divide on left over citizenship
A referendum proposing easier citizenship rules and labor reforms failed due to low turnout (~30%), falling short of the required 50% quorum.
Insight
This outcome strengthens Prime Minister Meloni and her right-wing coalition, highlighting the centre-left’s inability to mobilize voters around migration and labor reforms. While labor protections won broad approval, citizenship reform was deeply divisive even among progressives. The results emphasize robust anti-migrant sentiment in some regions and reflect broader democratic disengagement. With Italy’s next elections in 2027, this may solidify Meloni’s political dominance. (reuters.com)
Germany Grants Record Citizenships With Big Increase in Russians
Germany granted citizenship to a record ~292,000 people in 2024, a 46% increase over 2023, led by Syrians (~83,000) and a six-fold rise in Russians (~13,000).
Insight
The surge follows citizenship reforms reducing residency requirements and permitting dual nationality, aimed at integrating migrants and addressing labor shortages. Syrians remain the largest group, but the rapid rise in naturalizations among Russians signals broader demographic shifts. While integration efforts are strengthened, the new coalition intends to reverse elements of the reform, reflecting political concerns over migration’s pace and social cohesion.
Germany’s far‑right AfD harbours growing number of extremists, spy agency reports
Germany’s domestic intelligence agency (BfV) reported a 77% surge in extremists within the AfD, now numbering ~20,000, and classified the party as extremist.
Insight
This escalation justifies deeper surveillance and marks a significant shift, as the AfD is now officially treated as a threat to constitutional order. The rise in xenophobic rhetoric and right-wing crimes underscores an ideology shift amid its electoral success. Legal contestation of the designation may delay action, but societal and political debate over banning the AfD is gaining momentum. This situation tests Germany’s post-war democratic resilience.
Germany’s New Government Backs Independent Commerzbank
Chancellor-designate Merz expressed strong opposition to UniCredit’s stake in Commerzbank, defending its independence.
Insight
The stance highlights Berlin’s firm policy to safeguard systemic players and prevent loss of domestic credit capacity. Merz frames this as essential to protecting the Mittelstand and regional lending. The government’s continued intervention—retaining 12% stake and scrutinizing foreign acquisitions—signals political prioritization of financial sovereignty over market consolidation. It sets a precedent for future cross-border banking deals in the EU.
Slovak PM seeks control of ‘national identity’ issues in potential clash with EU law
PM Robert Fico is proposing a constitutional amendment to assert national supremacy on gender, family, education, and adoption—potentially overriding EU law.
Insight
The move reflects Fico’s conservative agenda and deepening populist shift, aiming to insulate Slovakia from progressive EU policies. Critics warn it could erode human rights and prompt legal conflict with EU obligations. Endorsed by part of the opposition, the proposal may pass but would fuel concerns over democratic backsliding. This signals rising tension between national sovereignty claims and EU legal supremacy, testing Slovakia’s EU alignment.
France’s Finance Minister Is the Calm Hand Macron Needs Now
Finance Minister Éric Lombard is helping President Macron pass a budget with €40 billion in savings through a fragmented parliament.
Insight
Lombard’s consensus-driven style offers political stability during fiscal tightening. His pragmatic approach aids Macron in balancing reforms with market expectations. This also positions France as a fiscal leader in the eurozone. His success could enhance France’s credit outlook and investor confidence. Lombard’s role underscores technocratic influence in political turbulence.
ECB’s Stournaras Says Stable EU Policy Draws Investors to Euro
ECB policymaker Yannis Stournaras highlighted that policy stability is making the euro more attractive to investors.
Insight
His remarks show confidence in the ECB’s cautious but coherent monetary stance. Stability fosters euro-denominated asset demand amid global volatility. It reflects EU-wide coordination, supporting long-term capital flows. Investors likely view the eurozone as a relative safe haven. Greece’s involvement in this discourse also signals its strengthened eurozone standing.
