Europe

Hungary is unlikely to cut interest rates any time soon as Governor Mihaly Varga pointed to a deterioration in the inflation outlook after his first monetary-policy meeting, Bloomberg News reported. The National Bank of Hungary kept the benchmark unchanged at 6.5% for a sixth month on Tuesday, tied with Romania for the highest key interest rate in the European Union. No other options were considered, Varga said. “Maintaining tight monetary conditions is warranted,” the governor told reporters.

The U.K. economy will grow slower than previously forecast in 2025, and the government will have to borrow more heavily over the coming years, Treasury Chief Rachel Reeves told lawmakers Wednesday, the Wall Street Journal reported. The Office for Budget Responsibility lowered its growth forecast for this year to 1% from 2% previously. On taking office in July, the left-of-center Labour government said reviving growth after 15 years of stagnation was its top priority.

U.K. inflation cooled a little in February, but remained well above the Bank of England’s target, likely keeping policymakers cautious as they mull further rate cuts, the Wall Street Journal reported. Consumer prices were 2.8% higher in February than a year earlier, compared with a 3.0% annual rate of inflation in January, according to data released Wednesday by the U.K. statistics agency. That slight decrease came in a little faster than economists had expected, and was driven by a shallower rise in energy prices and goods such as clothing and footwear.

French consumer confidence decreased to 92 in March, down from 93 in the previous month, according to INSEE. This number was below analyst expectations of 94, while also remaining below the index’s long-term average of 100, EuroNews.com reported. Consumers were increasingly pessimistic about their financial outlook, which fell to a total of -11 in March, versus -4 in February. Expectations for future standards of living also dropped to -50 in March from -47 in the previous month.

Hungary's central bank-linked foundations are facing renewed scrutiny over their investment practices after a scathing report from the State Audit Office (ASZ) triggered a sell-off in assets linked to their portfolio, IntelliNews.com reported. The scandal has spread to Polish-based real estate developer Globe Trade Centre, listed on the Warsaw Stock Exchange. After the report by ASZ, yields on a 2026 euro bond issued by the company surged from 8.4% to 13% in a week, and its shares fell 7%.

German restaurant chain Sausalitos has filed for bankruptcy after more than 30 years of operation, MAGL reported. The company cites a decline in profitability and changes in customer behavior as the reasons for its insolvency. Despite its insolvency, the company seeks a new investor to return "at the right time." The restaurant chain is considered a leader in the Mexican-American gastro-bar concept in Germany and is known for its cocktail bars and Tex-Mex cuisine.

Europe’s economic engine might finally be shifting into gear, as a rebound in German manufacturing and easing price pressures across the euro area offered a glimmer of hope that the continent’s economy could be turning a corner, EuroNews.com reported. The latest business surveys, known as Purchasing Managers’ Indexes (PMIs), revealed that the eurozone's private sector expanded for a third consecutive month in March.

Hungary held interest rates at the first policy meeting under Governor Mihaly Varga, with attention now shifting to the central bank’s monetary-policy guidance, Bloomberg News reported. The National Bank of Hungary kept the benchmark rate unchanged at 6.5% on Tuesday, tied with Romania for the highest key interest rate in the European Union. Annual price growth reached a 15-month high of 5.6% in February, bolstering bets that little to no room remained for monetary easing this year.

The UK’s top financial watchdog has promised a “less intensive approach” to firms whose intentions are pure, signaling a more pragmatic stance in a new five-year strategy that leans heavily into the government’s growth agenda, Bloomberg News reported. The Financial Conduct Authority, responsible for supervising some 42,000 firms, is trying to cut back on excessive form-filling and other hurdles that the industry says makes the UK a less attractive market.

More than 8,300 bounce back loans issued to the construction sector during the pandemic are suspected to have been fraudulent, according to a Construction News report. The loans, issued from May 2020 as emergency relief of up to £50,000 for small companies, were backed by 100 per cent government guarantees. Data obtained by Construction News under the Freedom of Information Act from the British Business Bank, which facilitated the scheme, showed that 8,356 bounce back loans to the industry were flagged as suspected frauds by lenders at the end of January.