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The conflict in the Middle East has raised European inflation to around 3% and has pushed the ECB out of its comfort zone. On 11 June, the central bank raised interest rates, and both its recent communications and financial market prices suggest that it will do so again in the coming months. The main issue is not the direct impact of rising energy costs, but the risk that this increase could spill over to other prices in the economy, leading to excessively high and persistent inflation. What do the data tell us about this spillover?

Digitalisation and advances in automation have the potential to alter countries' productive specialisation. In this article we attempt to predict the changes that will occur in what and how  (particularly advanced) economies will produce.

What exactly is the NGEU and how will it work? We answer the questions most frequently asked about this European Recovery Fund, its approval and implementation schedule, criteria and allocation of funds.

The 20 economies that make up the Euro area have a single currency with a common monetary policy and, implicitly, a fixed exchange rate. However, in the last two years the region has suffered significant discrepancies in the inflation rates of its member countries. What is behind this dispersion?

In the third article of the Dossier «An analysis of European productivity», we conduct an in-depth analysis of the key economic factors driving productivity at the European regional level and their quantitative contribution.

When we think of the main challenges facing central banks in the medium term, we have no choice but to talk about digital currencies. More specifically, we must address the possibility of central banks issuing their own digital currency (so-called central bank digital currencies, or CBDCs). What stage are we currently at? Are CBDCs an option that is making headway and, if so, how should they be designed?

The Industrial Accelerator Act, presented by the European Commission at the beginning of March, outlines its response to the EU’s weakening industrial base. It is structured around a set of quantitative objectives: a general one, to raise the sector’s share of the economy to 20% of GDP by 2035 (14% in 2025), and several specific ones, aimed at boosting productive capacity and reducing strategic dependencies in critical segments. In pursuit of this latter goal, it includes minimum European content requirements and maximum thresholds for third countries in terms of foreign direct investment and public procurement.

In the second article of the Dossier «An analysis of European productivity», we review a broad set of variables covering institutional, geographical and technological aspects, as well as others linked to the economy’s productive fabric, in order to distinguish the different groups of European regions according to their productivity level.

The vigorous recovery of the European economy after the pandemic has given way in recent years – in a more hostile geopolitical context – to a situation of weak growth. However, this is not the case across the board, neither geographically nor by sector. In particular, while countries such as Germany and Italy are showing significant apathy, the «European periphery» – so-named in a previous era – continues to show remarkable dynamism, led by Spain and Portugal. A similar contrast is found between the more erratic behaviour of the agricultural, manufacturing and construction sectors – with greater exposure to recent shocks – and the growing role in the economy of skilled services supported by favourable underlying trends such as the digital transformation.

For 2022 as a whole, the euro area’s trade balance in goods registered a deficit of around 60 billion euros (–0.5% of GDP vs. +2.3% in 2021). This was entirely due to the widening of the deficit in the energy balance, which doubled to exceed 500 billion euros, or around 4.5% of GDP.

The impact on the EU of a universal tariff on US imports of goods goes beyond the direct effect it will have on exporting companies, as it will also be felt indirectly across the economy as a whole and throughout European and global value chains.

The Draghi report lays the foundations for re-industrialisation in Europe, combining sweeping actions with a menu of specific proposals for 10 strategic sectors.

In the context of the European elections of 9 June, we bring forward the publication of the Dossier from June’s Monthly Report in order to contribute to the debate on the strengths and weaknesses of the Single Market at an economic level and some of the challenges that lie ahead: competitiveness, the impact of artificial intelligence, productivity and the capital markets union.

On balance, all the indicators suggest that growth in the euro area will experience a notable slowdown in Q4 due to the bottlenecks, although for the time being we are confident that the quarter-on-quarter growth rates will still be above their long-term average.

The NGEU funds and the national investment programmes in Germany and France are the result of a long process of changes in the big economic blocs, accelerated by COVID and the war in Ukraine. These efforts seek to redefine and adapt production models to the energy transition and digitalisation in a context of uncertainty and new geopolitical dynamics.

One of Donald Trump’s big proposals during the campaign that helped propel him to the US presidency was the introduction of a universal tariff of between 10% and 20% on imports of goods. How could this affect Europe?