France has committed to a real 60% increase to its defense budget. On top of this, they are sinking an extra 6.5 billion euros over the next two years into it. Rattled by the new, unprecedented threats, President Emmanuel Macron announced this move. These threats are at America’s doorstep and at their allies’ doorsteps. By 2027, France’s total defense spending is expected to reach 64 billion euros, marking a pivotal shift in the country’s military strategy.
In a joint ministerial statement, Le Drian and his German counterpart stressed the need for a common defense stance, calling Europe’s security environment “radically changed” by recent events. This recent development underscores our longstanding concerns regarding national security. It highlights the importance of a more cohesive and collaborative European defense against the backdrop of increasing geopolitical competition.
Economic Growth in the EU
Though a dark economic storm looms, the economic landscape in the European Union (EU) is showing signs of resilience. As of the first quarter of 2025, the GDP had grown by 0.5%. This welcomed trend continued through to the second quarter, with the GDP already showing a new growth of 0.2%. That’s only a 1.5% growth rate over the same period last year. More broadly, it highlights the EU’s robust post-pandemic economic bounceback.
Despite global economic challenges, the EU’s economy appears to be stabilizing, driven by various sectors and strategic investments across member states. Combined with strong job growth and a rebound recovery from the pandemic, it helps paint a picture of an improved, more stable economic outlook going forward across the union.
Inflation Trends Across Member States
Recent inflation trends across the European Union paint a complicated, contradictory picture. For five member states the annual inflation rate has decreased as compared to the previous month, twenty-two member states registered an increase. France, on the other hand, was able to pull off a low annual inflation rate of 0.9%. In third place was Cyprus with an even lower inflation rate of –0.5%. On the other hand, Romania and Estonia saw the most deflationary pressures clouding their economy at -5.8% and -5.2%, respectively.
Such swings in inflation rates have underscored the contrasting economic realities faced by EU member states. As policymakers navigate these challenges, they must balance fiscal responsibility with measures to support economic growth and stability.
Debt and Budgets in the EU
At the end of Q1 2025, the EU’s general government gross debt to GDP ratio stood at 81.8%. This was a small drop from 81.0% at the close of fourth-quarter calendar-year 2024. The decrease reflects the continuing strain on member states to rein in national debts while continuing to address growing economic stresses.
An estimated 35% of the EU budget is earmarked for climate- and biodiversity-related projects. This major commitment signals a new direction for the union, a focus on growth that is environmentally sustainable and inclusive, confronting climate challenges while maximizing economic opportunity.
Bulgaria is set to join the eurozone officially on January 1, 2026. This step will make it the 21st country to use the euro as its official currency. This milestone reflects Bulgaria’s ongoing efforts to integrate more deeply into the EU’s economic framework.