Europe in focus: September 2026

Politics

Six major net contributors demanded substantial cuts to the European Commission’s proposed 2028–2034 EU budget. Germany, Denmark, the Netherlands, Austria, Finland and Sweden issued a joint position on 27 August calling for the nearly €2 trillion proposal to be reduced by several hundred billion euros and rejecting additional common EU borrowing. They argued that spending should be redirected towards defence, competitiveness, migration and European sovereignty, setting up difficult negotiations that ultimately require unanimity among member states.

The European Commission approved a further €6.1 billion for Ukrainian defence procurement on 24 August. The package, financed through the EU’s €90 billion Ukraine Support Loan, covers air and missile defence, missiles, ammunition and radar systems. It follows procurement plans worth around €16 billion already approved under the mechanism, of which €8.35 billion has been disbursed. The decision further deepens the EU’s direct role in sustaining Ukraine’s defence capabilities.

Icelandic voters rejected reopening EU accession negotiations in a closely fought referendum on 29 August. The proposal was defeated by 52.8% to 47.2%, with turnout reaching 82.5%. The result halts the current government’s plan to reconsider Iceland’s long-frozen membership application and underlines continued concerns over sovereignty and fisheries. The vote was also significant for the EU’s wider enlargement and Arctic strategy.

The EU Packaging and Packaging Waste Regulation (PPWR) has come into force, gradually introducing new requirements for recyclability, labelling and composition of packaging. One of the main goals is that packaging placed on the European market will be recyclable by 2030.

Economy

European Union annual inflation was 3.0% in July 2026, up from 2.9% in June. A year earlier, the rate was 2.4%. The lowest annual rates were registered in Sweden (0.3%) and Czechia (1.3%). The highest annual rates were recorded in Romania (8.2%) and Lithuania (5.4%). Compared with June 2026, annual inflation fell in fifteen Member States, remained stable in three and rose in nine.

The EU unemployment rate was 6.1% in July 2026, also stable compared with June 2026 and up from 6.0% in July 2025.

In January to June 2026, the EU recorded a deficit of €14.9 bn, compared with €74.1 bn in January-June 2025. The extra-EU exports of goods fell to €1 317.0 bn (a decrease of 2.1% compared with January-June 2025), and imports rose to €1 331.9 bn (an increase of 4.7% compared with January-June 2025). Intra-EU trade rose to €2 200.6 bn in January-June 2026, +5.7% compared with January-June 2025.

In the second quarter of 2026, seasonally adjusted GDP increased by 0.4% in the euro area and by 0.5% in the EU, compared with the previous quarter. In the first quarter of 2026, GDP had remained stable in the euro area and had increased by 0.1% in the EU.

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