Europe Economic Weekly: Budgets and Barrels

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Europe Economic Weekly: Budgets and Barrels

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Europe Economic Weekly

Budgets and Barrels

Weekly view: Still milder than assumed for now 10 July 2026

The rise in oil prices to close to USD 80 per barrel is a reminder that the time to Economics

September central bank meetings is still long. It may marginaly reinforces our base case Europe

of another ECB hike (low conviction) and raises the risk of a BoE hike.

Euro area: Tracking German stimulus, slippage and reform BofA+44 20Euro7995Economics1476

Tracking fiscal impulse: spending progress seems ok. Construction data shows effects, europeaneconomics@bofa.com

but monetary policy hits the breaks. Tracking fiscal slippage: the new 2027 budget plan Ruben Segura-Cayuela

Europe Economist

raises net borrowing needs, again, in spite of underlying tightening. Tracking reform BofA Europe (Madrid)

next: the reform package is good news, but comparison to 2002-05 overdone. +34ruben.segura-cayuela@bofa.com91 514 3053

UK: Volat-oil EvelynEurope EconomistHerrmann

Recent escalation makes our call of unchanged rates this year a closer call. On balance, BofASE (France)

+33 1 8770 0292

we think energy prices would need to move higher sustainably for the BoE to hike, but evelyn.herrmann@bofa.com

risks of a hike are rising. We do a deep dive on the labour market, where lower effective Sonali Punhani

slack and possible stalling of wage disinflation can imply restrictive rates for longer. UK Economist

MLI (UK)

+44 20 7996 1032

sonali.punhani@bofa.comNext week:

The data and central bank calendar is relatively light, leaving space for Italian electoral Chiara Angeloni

reform watching, with the lower house discussion on Tuesday. In the UK, the BofA Europe (Milan)

nominations for the Labour leadership contest close on Wednesday.