European Union exports to the United States dropped by more than a quarter for a second consecutive month in February, but may be exaggerating the impact of President Donald Trump's tariffs, given they follow a year-ago period when front-loading began, Reuters reported. Exports from the 27-nation European Union to the United States fell by 26.4% in February, EU statistics agency Eurostat said on Friday, following a 27.8% drop in January, and contributing to a 60% reduction in the EU's trade surplus.
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The European Union will urge members to cut their dependence on Middle Eastern jet fuel and look into increasing imports from the U.S., in new guidelines expected next week, an official source told Reuters, as the Iran war disrupts global supply. The plans, previously unreported and still being finalised, will put a greater focus on self-sufficiency and resilience via Sustainable Aviation Fuel (SAF) or synthetic fuels. European airlines have warned of potential jet fuel shortages within weeks as a result of the Iran war, which could disrupt the summer travel season.
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Economic prospects for the eurozone have dimmed, with the IMF lowering its GDP growth forecast to 1.1% for the current year, EuroNews.com reported. This downgrade from the earlier 1.4% estimate comes as a direct consequence of the war in Iran, which has sent shockwaves through international markets. According to the IMF’s World Economic Outlook, released on Tuesday, the disruption to energy markets through the blockade of the Strait of Hormuz and infrastructure damage in the Middle East has effectively stalled the recovery of the world's major economies.
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The energy-price shock from the Iran war is landing between the European Central Bank’s baseline and adverse scenarios, its President Christine Lagarde said Tuesday, the Wall Street Journal reported. The ECB last month published three scenarios of the impact of the Iran war on the eurozone. The adverse scenario predicts a sharper rise in inflation and lower growth than the baseline, though the impact wouldn’t be as pronounced as its severe scenario.
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Five European Union countries are calling for a windfall tax on energy companies' profits in reaction to rising fuel prices due to the Iran war, according to a letter from finance ministers to the EU Commission seen by Reuters on Saturday. The finance ministers of Germany, Italy, Spain, Portugal and Austria made the joint call for an EU-wide tax in a letter dated Friday. Such a measure could help fund relief for consumers in the face of high energy prices and be a signal that "we stand united and are able to take action", they said.
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Italy’s deficit breached the European Union’s ceiling last year in the biggest fiscal setback for Prime Minister Giorgia Meloni’s government since she took office in 2022, Bloomberg News reported. The shortfall was 3.1% of gross domestic product, according to data published on Friday by the national statistics institute in Rome, confirming a preliminary estimate. Read more. (Subscription required.)
The European Central Bank’s next interest rate move will very likely be an increase, although it is still too early to say when it will start hiking, ECB policymaker Francois Villeroy de Galhau said on Thursday, Reuters reported.
The eurozone’s jobless rate edged higher in February, coming off a record low at the start of the year, ahead of the inflation shock and uncertainty prompted by the conflict in the Middle East, the Wall Street Journal reported. Unemployment in the 21-nation currency area rose to 6.2% in February, from the all-time low of 6.1% in January, the European Union’s statistics agency Eurostat said Wednesday. Joblessness broadly held steady across the bloc, slightly up in Italy, marginally down in Spain, while unchanged in France and Germany.
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