EUR News
LAST UPDATE: June 28, 2025
Merz Tells EU Leaders to Beware Growing Dangers of a Debt Crisis
German Chancellor Merz urged EU leaders to recognize the rising risks posed by mounting public, corporate, and household debt across member states. He warned that unaddressed debt vulnerabilities could jeopardize economic stability.
Insight
Merz is extending concerns from Germany’s national balance sheet to the broader EU. His warning may signal pressure for stricter fiscal coordination, raising tension between growth priorities and deficit discipline.
German industrial top brass to hold talks with EU chief on sector challenges
On July 2, CEOs from major German firms including Thyssenkrupp, Lufthansa, Rheinmetall, E.ON, and others will meet European Commission President von der Leyen. They’ll discuss strategies to counter high energy costs, stiff competition, bureaucratic hurdles, and looming trade threats ahead of a potential U.S. tariff.
Insight
This high-level dialogue underscores Germany’s critical role in Europe’s industrial ecosystem. The involvement of energy, defense, and manufacturing firms indicates coordination across strategic sectors facing systemic threats.
European Allies Wary of Buying American as They Plan Defense Buildup
European NATO countries are planning major defense expansion but express reluctance to purchase U.S. weapons, signaling growing interest in European-made alternatives amid concerns over dependency on Washington.
Insight
The shift reveals European intent to reduce reliance on U.S. defense systems and build strategic autonomy. Still, transitioning supply chains and technological capabilities could take years, highlighting a tension between ambition and capacity.
BoE urged to curb bond sales investors say could ‘reignite’ sell-off
Investors are pressuring the Bank of England to reduce its active bond sales (quantitative tightening), warning that letting £52 bn of bonds hit the market next year could spike long-term yields, strain public finances, and destabilize monetary control. The BoE is reviewing policy before a decision in September.
Insight
The debate highlights a fundamental tension in BoE strategy: accelerating balance sheet reduction versus avoiding market instability. The outcome may define the next phase of post-crisis monetary policy.
Keir Starmer faces £4.25 bn fiscal hit after benefits reversals
UK Prime Minister Keir Starmer reversed planned cuts to disability and pensioner benefits, creating a £4.25 bn budget shortfall. This follows internal dissent from over 120 Labour MPs and may force increased borrowing or tax hikes.
Insight
The U-turn underscores the tension between party unity and fiscal discipline; meeting MP demands improved internal cohesion but jeopardized investor confidence and the government’s fiscal credibility.
Turkey Plans to Skip Minimum-Wage Raise in Boost for Investors
The Turkish government is considering skipping its usual mid-year minimum wages increase, opting to contain labor costs inflation and appeal to investors. Final decision by President Erdogan is pending.
Insight
This strategy reflects Ankara’s willingness to prioritize macroeconomic stability and investor sentiment, though it risks eroding domestic purchasing power and fueling social discontent.
Denmark warns EU against halting green transition
Denmark’s Climate Minister Lars Aagaard cautioned EU peers not to stall climate ambitions—specifically the proposed 90% emissions cut by 2040—despite cost concerns and clogged defense budgets.
Insight
Demonstrating leadership during its upcoming EU presidency, Denmark highlights that climate and security goals must advance hand-in-hand, showcasing a forward-looking approach to integration of green and geopolitical priorities.
Iceland’s Inflation Accelerates Again, Fueled by Airfares
Iceland’s consumer price index climbed 4.2% year-on-year in June, driven largely by rising international airfare costs unsurprisingly linked to tourism demand.
Insight
Despite central bank efforts, persistent external cost pressures—especially from travel—are keeping inflation above target. This complicates potential interest rate reductions.
