Eurozone News
LAST UPDATE: June 24, 2025
ECB Alert to Inflation Threat From Strait of Hormuz, Lagarde Says
Lagarde cautioned that any obstruction in the Strait of Hormuz could elevate oil and gas prices, potentially reviving inflationary pressure across Europe. She emphasized the ECB’s readiness to respond to such risks .
Insight
The warning reveals central bank vigilance in light of external geopolitical fragility. Energy-linked inflation remains a critical tail risk that could complicate the ECB’s path to price stability.
Lagarde Reiterates ECB Is Well Placed to Navigate Uncertainty
ECB President Christine Lagarde said on June 23 that the ECB remains well-positioned to handle “exceptionally high” economic and political uncertainty, especially mid‑oil‑market swings from the Middle East. She affirmed inflation is on track to stabilize around 2% and emphasized the bank’s readiness to respond flexibly on a meeting-by-meeting, data-driven basis (bloomberg.com).
Insight
Her remarks underline the ECB’s confidence in its policy toolkit amid shifting global dynamics. By stressing data dependency and responsiveness, Lagarde reinforces the message that further easing is possible but not guaranteed—contingent on evolving inflation, trade, and geopolitical outcomes.
ECB’s Lagarde urges EU lawmakers to speed up digital euro law
ECB President Christine Lagarde called on the European Parliament to fast-track legislation enabling a digital euro by autumn. She noted delays pose risks to Europe’s financial autonomy, especially amid competition from private stablecoins .
Insight
The digital euro is framed as a strategic instrument for maintaining monetary sovereignty and countering private crypto threats. Lagarde’s urgency highlights institutional friction within the EU legislative process.
ECB’s Nagel says bond-buying is only for exceptional cases
ECB policymaker Joachim Nagel affirmed that the central bank would reserve large-scale bond-buying (QE) for “exceptional cases” only. He emphasized a strategic pivot toward traditional interest rate tools and careful use of monetary stimulus .
Insight
ECB appears to be scaling back unconventional measures in favor of interest-rate-based policy, signaling a shift as inflation stabilizes and economic outlook improves.
Italy to gradually meet new NATO spending target, seeks new EU budget rules
Italy will comply with a new NATO defense and security spending benchmark of 5% of GDP (3.5% defense + 1.5% security) by 2035. PM Giorgia Meloni emphasized flexibility in defining “security spending” and urged reforms to EU budget rules for accommodating higher defense outlays without disciplinary penalties (reuters.com, reuters.com).
Insight
Italy is striking a balance between NATO commitments and fiscal prudence. By seeking EU budget flexibility, Rome aims to maintain market confidence while fulfilling longer-term security obligations.
Germany to Lift Core Defense Spending to 3.5% of GDP by 2029
Germany plans to boost core defense spending to 3.5% of GDP by 2029, raising borrowing by around €378 bn over five years through debt‑brake reform. This follows a 2024 allocation of €86 bn (2.4% of GDP), with €153 bn expected by 2029 (news.google.com, bloomberg.com, reuters.com).
Insight
This marks Germany’s most ambitious rearmament since reunification, signaling a major shift in European defense strategy backed by constitutional changes and EU-fiscal flexibility.
Pedro Sánchez torpedoes Nato unity on eve of crucial summit
Spanish PM Pedro Sánchez secured an opt‑out from NATO’s pledge to reach 5% GDP defense spending by 2035, committing only 2.1%. The flexibility was framed through wording tweaks approved by Rutte, drawing strong criticism from Poland and Belgium .
Insight
Spain’s maneuver exposes sharp division within NATO over burden-sharing. It may undermine alliance cohesion even as it preserves domestic political expediency.
Ireland Sees Thousands of Jobs at Risk From US Pharma Tariffs
Irish Finance Minister Donohoe warned that US pharmaceutical tariffs could put up to 75,000 jobs at risk. In response, the government may use fiscal buffers to bolster competitiveness .
Insight
Ireland’s heavy reliance on the pharma sector makes it vulnerable to US trade actions. Policymakers are preparing to defend its economic backbone amid escalating trade tensions.
Slovakia reserves right to decide pace of defense spending rise, PM Fico says
Slovakia’s PM Robert Fico affirmed his government will independently determine the timing and structure of its defense spending increases, prioritizing dual-use infrastructure, while honoring NATO consensus .
Insight
Fico’s stance echoes Spain’s resistance—emphasizing national sovereignty and budget realities. It highlights an east–west rift in NATO over defense financing obligations.
