EU news monthly: Annual inflation was 2.3% in June 2025
Politics
EU Member States have given their final approval to Bulgaria's entry into the eurozone from 1 January 2026. The decision was made in Brussels by the bloc's finance ministers. The European Commission published a so-called convergence report at the beginning of June, in which it concluded that Bulgaria meets all the criteria to start using the euro from 1 January next year. The eurozone will thus expand to 21 countries.
The European Commission is proposing a target of reducing emissions by 90% by 2040. This is to follow on from the -55% plan for 2030. A small part of the emmissions (3%) should be able to be "exported" to countries outside the EU, which can be cheaper and more efficient, by buying international carbon credits.
The European Commission has proposed a total budget for the period 2028-2034 of 2 trillion euros (the current seven-year budget is 1.2 trillion euros). About 35% of the budget is to be allocated to projects related to climate and biodiversity. Spending on defense and space, migration management and support for Ukraine will increase significantly.
Slovakia has allowed the approval of the 18th package of European Union sanctions against Russia. Slovakia had blocked the adoption of new anti-Russian sanctions because it requested guarantees for another initiative of the European Commission which Bratislava disagrees with, according to which the import of Russian gas into the Union is to be gradually terminated. The Commission has provided specific guarantees in recent days. The EC is counting on further restrictions on the Russian energy and banking sectors and a reduction in the price ceiling for Russian oil as part of the 18th package of sanctions against Russia.
France will spend an additional 6.5 billion euros on defense over the next two years in light of new and unprecedented threats in the world, French President Emmanuel Macron said. Emmanual Macron also said he wants to push for France to add 3.5 billion euros to its defense budget in 2026 and three billion euros a year later. In 2027, the last year of his second term, France should thus spend a total of 64 billion euros on defense.
Economy
In the second quarter of 2025, seasonally adjusted GDP increased by 0.2% in the EU, compared with the previous quarter. In the first quarter of 2025, GDP had increased by 0.5% in the EU. Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 1.5% in the EU in the second quarter of 2025.
The EU annual inflation was 2.3% in June 2025, up from 2.2% in May. A year earlier, the rate was 2.6%. The lowest annual rates were registered in Cyprus (0.5%) and France (0.9%). The highest annual rates were recorded in Romania (5.8%) and Estonia (5.2%). Compared with May 2025, annual inflation fell in five Member States and rose in twenty-two.
The EU unemployment rate was 5.9% in June 2025, also stable compared with May 2025 and down from 6.0% in June 2024.
In June 2025, compared with May 2025, industrial producer prices increased by by 0.7% in the EU. In May 2025, industrial producer prices fell by 0.6%.
At the end of the first quarter of 2025, the general government gross debt to GDP ratio in the EU stood at 81.8%, compared with 81.0 % at the end of the fourth quarter of 2024.
Author
Erste Bank Research Team
Erste Bank
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