Latest news with #SylvainBroyer
Euronews
3 days ago
- Business
- Euronews
Retaliatory tariffs: Which EU countries could be impacted the most?
The EU is gearing up for retaliation in case trade negotiations with Washington fail by 1 August. Should there be no agreement, the US will start charging 30% tariffs on almost all goods imported from the bloc. After having been caught off guard by a letter threatening the 30% duty on EU goods last weekend, the European Commission has quickly tabled a plan to put countertariffs on US exports worth €72 billion, inevitably hitting the European Union's own economy. This is a follow-up on the European Commission's previously proposed list of US products, worth €95bn, that could be hit with EU countertariffs. The potential EU retaliatory tariffs target imports of industrial goods from the US, including aircraft and aircraft parts, machinery, automotives, chemicals and plastics, and medical devices and equipment. These types of imports are worth €65.7bn out of the €72bn total. It also lists agricultural products, including bourbon, but there are minor though surprising items, such as amusement park rides, toothbrushes, hairbrushes and natural rubber latex. If imposed, the tariffs mean that European consumers or businesses would buy these products at a higher price, pushing up inflation. However, according to Sylvain Broyer, chief European economist, S&P Global Ratings, the inflationary effect of countermeasures could be minimal. He told Euronews Business that 'EU tariffs on US goods would have only a modest impact on European inflation — likely just a couple of tenths of a percentage point — and are unlikely to significantly affect overall economic activity.' The bigger risk may come from supply chain disruptions. Where Europe could really feel the pinch is in services: 'the EU is highly reliant on US services, particularly in sectors like technology, payments and consulting,' Broyer said. Which EU countries are hit the most by these countermeasures? Certain industries, propping up various countries' economies, could face serious supply chain disruptions if the EU and the US go into a trade war. Aviation is one of them, as aeroplanes and aircraft parts are some of the products set to be the most dramatically impacted by EU countermeasures. Potential EU import restrictions on these goods, worth nearly €11bn, according to a document from the European Commission. Within the member states, the country with the biggest US aircraft imports in 2024 was Ireland, followed by France, the Netherlands and Germany. Aviation between the US and EU is a highly interconnected sector. French multinational aerospace and defence company Thales supplies US-based Boeing and European competitor Airbus with flight management systems and cockpit displays. In exchange, US aerospace giant Honeywell provides flight management systems for Airbus. Apart from threatening serious breakdowns in the supply chain, the EU's potential retaliatory tariffs on US-made aircraft is a direct blow to Boeing. The firm sourced 13% or more than $8.7bn (€7.5bn) of its revenues from Europe in 2024. Any such step from the EU may risk higher US tariffs on European aircraft. For the European firm Airbus, its North America revenue was double that of Boeing's last year, at more than $16bn (€13.8bn). Ireland left vulnerable Potential EU countermeasures on aircraft imports, coupled with retaliation from the US administration, could risk Ireland's position as a world-leading hub in aviation. Ireland is home to more than 50 aircraft leasing companies managing 10,000 aircraft. According to a recent report by aviation investment group Irelandia, this is equivalent to 37% of the global commercial fleet and makes the country a central player in the world's air transport infrastructure. Ireland is already facing a serious hit to its economy due to potentially high US tariffs on its exports to the US after the 1 August deadline. The country is deemed to be one of the most affected economies in the EU, besides Germany. Brussels-based think tank Bruegel has estimated that Ireland's cumulative real GDP loss, due to the total impact of US tariffs, could be 3% by 2028. That's if, as President Trump has promised, pharmaceutical goods face heavy duties. 'In Ireland's case, the aircraft imports amount to over 1% of GDP, in the Netherlands, the large machinery and medicinal equipment imports are equivalent to 6% of GDP,' Rory Fennessy, senior economist at Oxford Economics, told Euronews Business. Belgium's overall imports from the US are equivalent to 5% of GDP. Machinery is the second most concerned product group on the Commission's list, imports worth €9.43bn would be hit by countertariffs. That would come as a shock to supply chains in Germany, the Netherlands, France and Ireland. 'Even if countries have a limited direct import exposure to the United States, there can be significant spillovers to other countries simply down to the close supply chain integration and the impact on adjacent support industries due to tariffs,' said Fennessy. One of the key examples is the close relationship between Germany and the Central and Eastern European countries, including Hungary, Poland and Slovakia, especially with regards to the automotive sector. Countries in Central and Eastern Europe have been attracting a lot of foreign investment, much of which came from Germany. This plays an important role in driving the region's development. And vehicles are the third-largest product group exposed to potential retaliatory tariffs. The country with the highest imports of vehicles or parts from the US is Germany, worth nearly €7.5bn in 2024, followed by Belgium (€1.8bn). These countries would feel the most pressure from higher prices in this sector. 'But of course, the exact spillover varies and some countries are more directly exposed in certain sectors, so would likely feel a quicker price impact in such cases,' Fennessy added. If prices go up, even temporarily, while companies try to find new sources to contribute to their supply chains, that would be another blow to Germany's ailing automotive sector and could lead to more cost-cutting measures from the major brands, including Volkswagen and Mercedes. These firms have production plants in Hungary and elsewhere in central and eastern Europe. What other products are concerned? The European Commission's product hit list includes chemicals and plastics, as well as medical devices, with each category amounting to more than €7.5bn worth of imports from the US to the EU in 2024. The most affected countries are Belgium, the Netherlands and Germany. As for chemicals, the EU nation that buys the most from the US is Belgium, with €13.7bn worth of imports in 2024. That's followed by the Netherlands with €12.5bn and Germany with €12.3bn. When it comes to plastics, Belgium tops the list with more than €3bn of US imports, followed by Germany (€2bn) and the Netherlands with €1.5bn. Imports of US medical devices in the EU was the highest in the Netherlands, where these products were worth €4.63bn. That's followed by Germany, with €2.65bn in imports, and Belgium with more than €1bn. The EU is also considering putting retaliatory tariffs on €6.4bn worth of agricultural products, including bourbon whiskey. The country that imports the most bourbon from the US is the Netherlands, buying goods worth more than €60 million a year. This, on its own, may not hurt the economy. But if the European spirits and drinks sector is exposed to Washington's countermeasures, French wine and Irish whiskey would also be targeted. If there is no agreement between the US and the EU before Trump's deadline, the European agricultural sector, among many others, will face a 30% tariff on its exports to the US, a consequence labelled catastrophic by French lobbying groups. Brussels says it is still seeking a deal to avoid a tit-for-tat escalation in the trade war but is poised to retaliate if needed.
Yahoo
29-03-2025
- Business
- Yahoo
Tariffs and defence spending: S&P Global slashes eurozone and UK growth forecast
Economic uncertainty is set to reduce the eurozone economy, worth €14.6 trillion, by a cumulative 0.4% of GDP over 2025 to 2026, according to S&P Global's latest report. In its latest economic forecast, penned before the 25% tariffs on US car imports were announced, S&P Global also lowered its previous expectations for the eurozone from 1.2% to 0.9% for 2025 due to this uncertainty. Chief EMEA Economist Sylvain Broyer told Euronews Business that 'uncertainty itself is likely to pose a greater risk to the European economy than the tariffs alone'. On the other hand, there are green shoots of hope in Europe. Due to fiscal stimulus in Germany and the EU, GDP could grow by 1.4% in 2026. Broyer, emphasising that his forecast could change due to unpredictable policy moves ahead, sketched up various scenarios to see the effect of potential tariffs on the bloc's economy. In the worst case scenario, an increase in US tariffs on all EU imports to 25% would limit GDP growth in the eurozone to 0.5% in 2025 and 1.2% in 2026. In this case, he predicts that the ECB would cut interest rates more than once this year and raise them later than experts currently predict. Commenting on the White House's latest announcements, promising 25% tariffs on all cars and car parts, Broyer said to Euronews Business that their forecast had already taken into consideration a 10% tariff of this nature. He added that an additional 15% would have a limited effect on the current figures. 'Germany would be more significantly impacted than the broader eurozone, given its higher reliance on US car exports — approximately 1.5 times the European average,' Broyer said, adding that it would lower German output by 0.1% for 2025. On a more positive note, confidence in Europe is climbing, supported by falling interest rates and inflation, yielding continued strength for the labour market. The expected fiscal stimulus, especially in the defence sector, is further boosting confidence. EU member states will likely agree to an increase in defence spending by 1% of GDP from 2026, which could boost eurozone GDP by 0.1% in 2026, 0.2% in 2027, and 0.3% in 2028. As potential EU retaliatory tariffs did not seem to substantially boost inflation in the bloc at the time of finalising the report, S&P Global forecast that the ECB would cut rates one more time this year—to 2.25% in April or June. S&P Global expects that the ECB will start raising its key interest rate in the second half of 2026, with two hikes expected, until the deposit facility rate reaches 2.75% by the end of next year. It expects a strong recovery in credit demand and suggested that fiscal stimulus will push the economy to an unsustainable rate of growth. Related Trade tariffs could push up eurozone inflation by 0.5%, ECB's Lagarde warns ECB cuts rates for sixth time since June despite sticky inflation Broyer wrote that the risks to the current forecast include trade uncertainty, potential failure to execute fiscal plans, and spillovers from the US economy if growth across the Atlantic is hit by higher import prices. On the flip side, fiscal stimulus programs could have a greater-than-expected impact and improve confidence rapidly. In another economic forecast focused on the UK, which arrived before the car tariff announcement, S&P Global slashed its expectations about the growth of the British economy to 0.8% from 1.5%. The almost halving of the forecast can be explained by high inflation, weak export volumes, and tight monetary policy. The UK's GDP expanded by 1.1% in 2024, according to the statistics office. If the UK cannot wiggle its way out of the newly announced 25% tariffs on car exports to the US, this could result in a 0.2% hit to GDP, according to Marion Amiot, Chief UK Economist at S&P Global Ratings. 'Car exports to the US are the largest source of bilateral goods trade surplus for the UK,' she said. Uncertainty around trade, weak demand in Europe and China, and the strong value of the pound are limiting the country's exports, which provided 31% of the nation's GDP in 2024. Weak export growth is also due to elevated labour and energy costs for companies. Related UK Spring Statement: Further budget cuts and halved economic growth 'The energy prices are still twice as high today as they were before the energy crisis, so there are a lot of things they have to absorb,' Amiot told Euronews Business. One segment that can expect accelerating demand at the moment is defence. As the UK is the fourth largest defence exporter in Europe, it could potentially benefit from increased EU military spending in the coming years. 'It's not quite clear what the partnership will look like in the future, but there seems to be willingness to cooperate on defence, even though we saw that some of the EU spending is likely to exclude UK firms,' Amiot said. As the UK government has left itself very little fiscal room to manoeuvre, there is uncertainty as to whether the state will raise taxes—particularly as the cost of servicing debt has risen. 'Firms and households are likely to expect more tax increases or some further cuts to the welfare bill. So this doesn't put businesses and households in a good position to confidently invest or spend,' Amiot said. Related Bank of England keeps benchmark interest rate stable at 4.5% Meanwhile, sustained wage growth close to 6% in December is fuelling inflation, putting the central bank in a difficult position as growth remains weak. Inflationary pressures are tying the policymakers' hands as they remain cautious about cutting, while investors are hungry for lower rates. The Bank of England kept its benchmark interest rate stable at 4.5% at its latest monetary policy meeting. The latest inflation figure, 2.8% for February, fuelled hopes of a cut, but the majority of the analysts agreed that prices would rise sharply in the coming months. In its forecast, S&P Global expects the Bank of England to cut rates to 4% by the end of the third quarter in 2025. They nonetheless expect one less rate cut than in their previous forecast, expecting more stubborn inflation. In 2026, growth is expected to accelerate, with the report predicting a 1.6% increase in economic output. 'Things are looking up for 2026, with regional growth picking up, rates cut by another 50bp, and inflation edging back to 2.5%,' read the report. Sign in to access your portfolio
Yahoo
29-03-2025
- Business
- Yahoo
Tariffs and defence spending: S&P Global slashes eurozone and UK growth forecast
Economic uncertainty is set to reduce the eurozone economy, worth €14.6 trillion, by a cumulative 0.4% of GDP over 2025 to 2026, according to S&P Global's latest report. In its latest economic forecast, penned before the 25% tariffs on US car imports were announced, S&P Global also lowered its previous expectations for the eurozone from 1.2% to 0.9% for 2025 due to this uncertainty. Chief EMEA Economist Sylvain Broyer told Euronews Business that 'uncertainty itself is likely to pose a greater risk to the European economy than the tariffs alone'. On the other hand, there are green shoots of hope in Europe. Due to fiscal stimulus in Germany and the EU, GDP could grow by 1.4% in 2026. Broyer, emphasising that his forecast could change due to unpredictable policy moves ahead, sketched up various scenarios to see the effect of potential tariffs on the bloc's economy. In the worst case scenario, an increase in US tariffs on all EU imports to 25% would limit GDP growth in the eurozone to 0.5% in 2025 and 1.2% in 2026. In this case, he predicts that the ECB would cut interest rates more than once this year and raise them later than experts currently predict. Commenting on the White House's latest announcements, promising 25% tariffs on all cars and car parts, Broyer said to Euronews Business that their forecast had already taken into consideration a 10% tariff of this nature. He added that an additional 15% would have a limited effect on the current figures. 'Germany would be more significantly impacted than the broader eurozone, given its higher reliance on US car exports — approximately 1.5 times the European average,' Broyer said, adding that it would lower German output by 0.1% for 2025. On a more positive note, confidence in Europe is climbing, supported by falling interest rates and inflation, yielding continued strength for the labour market. The expected fiscal stimulus, especially in the defence sector, is further boosting confidence. EU member states will likely agree to an increase in defence spending by 1% of GDP from 2026, which could boost eurozone GDP by 0.1% in 2026, 0.2% in 2027, and 0.3% in 2028. As potential EU retaliatory tariffs did not seem to substantially boost inflation in the bloc at the time of finalising the report, S&P Global forecast that the ECB would cut rates one more time this year—to 2.25% in April or June. S&P Global expects that the ECB will start raising its key interest rate in the second half of 2026, with two hikes expected, until the deposit facility rate reaches 2.75% by the end of next year. It expects a strong recovery in credit demand and suggested that fiscal stimulus will push the economy to an unsustainable rate of growth. Related Trade tariffs could push up eurozone inflation by 0.5%, ECB's Lagarde warns ECB cuts rates for sixth time since June despite sticky inflation Broyer wrote that the risks to the current forecast include trade uncertainty, potential failure to execute fiscal plans, and spillovers from the US economy if growth across the Atlantic is hit by higher import prices. On the flip side, fiscal stimulus programs could have a greater-than-expected impact and improve confidence rapidly. In another economic forecast focused on the UK, which arrived before the car tariff announcement, S&P Global slashed its expectations about the growth of the British economy to 0.8% from 1.5%. The almost halving of the forecast can be explained by high inflation, weak export volumes, and tight monetary policy. The UK's GDP expanded by 1.1% in 2024, according to the statistics office. If the UK cannot wiggle its way out of the newly announced 25% tariffs on car exports to the US, this could result in a 0.2% hit to GDP, according to Marion Amiot, Chief UK Economist at S&P Global Ratings. 'Car exports to the US are the largest source of bilateral goods trade surplus for the UK,' she said. Uncertainty around trade, weak demand in Europe and China, and the strong value of the pound are limiting the country's exports, which provided 31% of the nation's GDP in 2024. Weak export growth is also due to elevated labour and energy costs for companies. Related UK Spring Statement: Further budget cuts and halved economic growth 'The energy prices are still twice as high today as they were before the energy crisis, so there are a lot of things they have to absorb,' Amiot told Euronews Business. One segment that can expect accelerating demand at the moment is defence. As the UK is the fourth largest defence exporter in Europe, it could potentially benefit from increased EU military spending in the coming years. 'It's not quite clear what the partnership will look like in the future, but there seems to be willingness to cooperate on defence, even though we saw that some of the EU spending is likely to exclude UK firms,' Amiot said. As the UK government has left itself very little fiscal room to manoeuvre, there is uncertainty as to whether the state will raise taxes—particularly as the cost of servicing debt has risen. 'Firms and households are likely to expect more tax increases or some further cuts to the welfare bill. So this doesn't put businesses and households in a good position to confidently invest or spend,' Amiot said. Related Bank of England keeps benchmark interest rate stable at 4.5% Meanwhile, sustained wage growth close to 6% in December is fuelling inflation, putting the central bank in a difficult position as growth remains weak. Inflationary pressures are tying the policymakers' hands as they remain cautious about cutting, while investors are hungry for lower rates. The Bank of England kept its benchmark interest rate stable at 4.5% at its latest monetary policy meeting. The latest inflation figure, 2.8% for February, fuelled hopes of a cut, but the majority of the analysts agreed that prices would rise sharply in the coming months. In its forecast, S&P Global expects the Bank of England to cut rates to 4% by the end of the third quarter in 2025. They nonetheless expect one less rate cut than in their previous forecast, expecting more stubborn inflation. In 2026, growth is expected to accelerate, with the report predicting a 1.6% increase in economic output. 'Things are looking up for 2026, with regional growth picking up, rates cut by another 50bp, and inflation edging back to 2.5%,' read the report. Sign in to access your portfolio
Euronews
29-03-2025
- Business
- Euronews
Tariffs and defence spending: S&P Global slashes eurozone and UK growth forecast
ADVERTISEMENT Economic uncertainty is set to reduce the eurozone economy, worth €14.6 trillion, by a cumulative 0.4% of GDP over 2025 to 2026, according to S&P Global's latest report. In its latest economic forecast, penned before the 25% tariffs on US car imports were announced, S&P Global also lowered its previous expectations for the eurozone from 1.2% to 0.9% for 2025 due to this uncertainty. Chief EMEA Economist Sylvain Broyer told Euronews Business that 'uncertainty itself is likely to pose a greater risk to the European economy than the tariffs alone'. On the other hand, there are green shoots of hope in Europe. Due to fiscal stimulus in Germany and the EU, GDP could grow by 1.4% in 2026. To what extent could US tariffs harm European recovery? Broyer, emphasising that his forecast could change due to unpredictable policy moves ahead, sketched up various scenarios to see the effect of potential tariffs on the bloc's economy. In the worst case scenario, an increase in US tariffs on all EU imports to 25% would limit GDP growth in the eurozone to 0.5% in 2025 and 1.2% in 2026. In this case, he predicts that the ECB would cut interest rates more than once this year and raise them later than experts currently predict. S&P Global forecast S&P Global Commenting on the White House's latest announcements, promising 25% tariffs on all cars and car parts, Broyer said to Euronews Business that their forecast had already taken into consideration a 10% tariff of this nature. He added that an additional 15% would have a limited effect on the current figures. 'Germany would be more significantly impacted than the broader eurozone, given its higher reliance on US car exports — approximately 1.5 times the European average,' Broyer said, adding that it would lower German output by 0.1% for 2025. On a more positive note, confidence in Europe is climbing, supported by falling interest rates and inflation, yielding continued strength for the labour market. The expected fiscal stimulus, especially in the defence sector, is further boosting confidence. EU member states will likely agree to an increase in defence spending by 1% of GDP from 2026, which could boost eurozone GDP by 0.1% in 2026, 0.2% in 2027, and 0.3% in 2028. A likely rate hike from the ECB is on the horizon As potential EU retaliatory tariffs did not seem to substantially boost inflation in the bloc at the time of finalising the report, S&P Global forecast that the ECB would cut rates one more time this year—to 2.25% in April or June. S&P Global expects that the ECB will start raising its key interest rate in the second half of 2026, with two hikes expected, until the deposit facility rate reaches 2.75% by the end of next year. It expects a strong recovery in credit demand and suggested that fiscal stimulus will push the economy to an unsustainable rate of growth. Related Trade tariffs could push up eurozone inflation by 0.5%, ECB's Lagarde warns ECB cuts rates for sixth time since June despite sticky inflation Broyer wrote that the risks to the current forecast include trade uncertainty, potential failure to execute fiscal plans, and spillovers from the US economy if growth across the Atlantic is hit by higher import prices. On the flip side, fiscal stimulus programs could have a greater-than-expected impact and improve confidence rapidly. UK growth prospects nearly halved In another economic forecast focused on the UK, which arrived before the car tariff announcement, S&P Global slashed its expectations about the growth of the British economy to 0.8% from 1.5%. The almost halving of the forecast can be explained by high inflation, weak export volumes, and tight monetary policy. The UK's GDP expanded by 1.1% in 2024, according to the statistics office. ADVERTISEMENT If the UK cannot wiggle its way out of the newly announced 25% tariffs on car exports to the US, this could result in a 0.2% hit to GDP, according to Marion Amiot, Chief UK Economist at S&P Global Ratings. 'Car exports to the US are the largest source of bilateral goods trade surplus for the UK,' she said. Uncertainty around trade, weak demand in Europe and China, and the strong value of the pound are limiting the country's exports, which provided 31% of the nation's GDP in 2024. Weak export growth is also due to elevated labour and energy costs for companies. Related UK Spring Statement: Further budget cuts and halved economic growth 'The energy prices are still twice as high today as they were before the energy crisis, so there are a lot of things they have to absorb,' Amiot told Euronews Business. ADVERTISEMENT One segment that can expect accelerating demand at the moment is defence. As the UK is the fourth largest defence exporter in Europe, it could potentially benefit from increased EU military spending in the coming years. 'It's not quite clear what the partnership will look like in the future, but there seems to be willingness to cooperate on defence, even though we saw that some of the EU spending is likely to exclude UK firms,' Amiot said. What is the Bank of England's next move? As the UK government has left itself very little fiscal room to manoeuvre, there is uncertainty as to whether the state will raise taxes—particularly as the cost of servicing debt has risen. 'Firms and households are likely to expect more tax increases or some further cuts to the welfare bill. So this doesn't put businesses and households in a good position to confidently invest or spend,' Amiot said. ADVERTISEMENT Related Bank of England keeps benchmark interest rate stable at 4.5% Meanwhile, sustained wage growth close to 6% in December is fuelling inflation, putting the central bank in a difficult position as growth remains weak. Inflationary pressures are tying the policymakers' hands as they remain cautious about cutting, while investors are hungry for lower rates. The Bank of England kept its benchmark interest rate stable at 4.5% at its latest monetary policy meeting. The latest inflation figure, 2.8% for February, fuelled hopes of a cut, but the majority of the analysts agreed that prices would rise sharply in the coming months. In its forecast, S&P Global expects the Bank of England to cut rates to 4% by the end of the third quarter in 2025. They nonetheless expect one less rate cut than in their previous forecast, expecting more stubborn inflation. ADVERTISEMENT In 2026, growth is expected to accelerate, with the report predicting a 1.6% increase in economic output. 'Things are looking up for 2026, with regional growth picking up, rates cut by another 50bp, and inflation edging back to 2.5%,' read the report.
Euronews
07-03-2025
- Business
- Euronews
DHL's shares soar 10% as it announces savings plan and job cuts
The European Central Bank cut its benchmark interest rate by a quarter point to 2.5% on Thursday as inflation nears 2% and growth remains weak. ADVERTISEMENT The ECB reduced its interest rates on Thursday afternoon during its March meeting, as analysts had anticipated. The interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 2.50%, 2.65% and 2.90% respectively, with effect from 12 March 2025. The interest rate on the main refinancing operations is the rate banks pay when they borrow money from the ECB for one week, while the rate on the deposit facility is what banks can use to make overnight deposits with the Eurosystem. The rate on the marginal lending facility, meanwhile, offers overnight credit to banks from the Eurosystem. "Monetary policy is becoming meaningfully less restrictive, as the interest rate cuts are making new borrowing less expensive for firms and households and loan growth is picking up," the ECB said in a statement. "At the same time, a headwind to the easing of financing conditions comes from past interest rate hikes still transmitting to the stock of credit, and lending remains subdued overall. The economy faces continued challenges and staff have again marked down their growth projections – to 0.9% for 2025, 1.2% for 2026 and 1.3% for 2027." Stubborn inflation The decision comes after inflation cooled to 2.4% in the eurozone in February, higher than the forecasted 2.3%. While price pressures are nearing the ECB's 2% target, the total was predominantly driven up by services inflation - which came to 3.7% year-on-year. On a monthly basis, consumer prices also rose 0.5% from January, the steepest increase seen since April 2024. Looking ahead, the prospect of a trade war with the US raises the chance that these totals could rise. US President Donald Trump is threatening a 25% tariff on EU imports and the bloc has warned it would retaliate with its own levies. Another factor complicating the eurozone's economic future is Russia's war in Ukraine. With the new US administration pulling back military support for the EU, member states must raise their own military budgets, pushing up spending and debt levels. "It's not impossible" that Thursday's rate cut is the last in the cycle, said Sylvain Broyer, Chief EMEA Economist at S&P Global Ratings. "Upside risks to inflation remain, especially via wages, and if you look at the bank lending survey, the flow of new loans or the breakdown of money growth, the empirical evidence suggests that ECB rates are already no longer constraining demand." ADVERTISEMENT "How Europe will finance its defence efforts - should it be more by using the headroom in the EU budget and leveraging private savings through the EIB balance sheet, rather than by relaxing EU fiscal rules to allow governments to run higher deficits - is also important to the ECB," Broyer added. Stuttering growth While managing these risks, policymakers are also conscious of lacklustre growth across the eurozone. In the final quarter of 2024, seasonally adjusted GDP increased by 0.1% quarter-on-quarter in the eurozone and by 0.2% in the EU, according to Eurostat. 'The euro-zone economy performed a little better than previously thought in Q4, but growth was still extremely weak and the early signs are that it got off to a slow start to 2025,' Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said. ADVERTISEMENT 'The key point is that a 0.1% expansion is hardly something to get excited about,' he added. Across the Atlantic, the Federal Reserve will be making its next monetary policy decision on 19 March. It's forecasted that US interest rates will be cut two or three times in 2025, although these moves may come later in the year.
