Macro, markets, ECB, trade, fiscal policy
Eurozone services PMI confirmed at 47.6 in April 2026, dropping into contraction. Germany 46.9, France 46.5, Spain crashed to 47.9 from 53.3. The energy shock is destroying consumer purchasing power across Europe’s largest economies.
German factory orders rose 5.0% MoM in March 2026, beating consensus 1.0% by five times, driven by defense procurement acceleration across Europe, front-loaded orders ahead of Iran war supply-chain disruptions, and a weak euro boosting exports.
Eurozone manufacturing PMI confirmed at 52.2 in April 2026, with Spain leading at 51.7, Italy at 52.1, France 52.8 and Germany 51.4. Defense procurement and auto orders are sustaining factory output even as consumer-facing services collapse.
The European Central Bank held its deposit rate at 2% on 30 April 2026 for the third consecutive meeting. Eurozone inflation jumped to 3% in April from 1.7% in February, driven by 10.9% energy price increase amid the Iran war.
ECB held deposit rate at 2% on 30 April for third consecutive meeting. Eurozone inflation 3% in April, Brent crude above $126, GDP growth slowed to 0.8% Q1 2026. Lagarde: ‘data-dependent and meeting-by-meeting’ approach.
EUR/USD trades near 1.17 in early May 2026 as ECB holds steady while signalling June rate hike. Markets price in three hikes for 2026 amid Middle East tensions and US tariffs.
EU finance ministers met in ECOFIN on 5 May 2026 to agree new rules to fight VAT fraud and to debate the market integration and supervision package — a key part of the savings and investment union.
The Eurogroup met on 4 May 2026 to assess the impact of the Middle East conflict on the EU economy. Finance ministers also discussed banking operational resilience, cyber security, and AI use in finance.
ECB confirms in May 2026 that euro area growth has been revised up above 1% for 2026 and 1.4% from 2027, with inflation stabilising at the 2% target and unemployment near historic lows.
European Parliament negotiates pushing the next Horizon Europe budget to €200 billion for 2028-2034, up from the Commission’s €175 billion proposal, signalling EU strategic focus on research.