{"id":73049,"date":"2026-10-15T04:38:11","date_gmt":"2026-10-15T08:38:11","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/european-economic-outlook-boe-sees-resilience-amid-energy-shocks-as-germany-pushes-for-eu-budget-cuts\/73049\/"},"modified":"2026-10-15T04:38:11","modified_gmt":"2026-10-15T08:38:11","slug":"european-economic-outlook-boe-sees-resilience-amid-energy-shocks-as-germany-pushes-for-eu-budget-cuts","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/european-economic-outlook-boe-sees-resilience-amid-energy-shocks-as-germany-pushes-for-eu-budget-cuts\/73049\/","title":{"rendered":"European Economic Outlook: BoE Sees Resilience Amid Energy Shocks as Germany Pushes for EU Budget Cuts"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Bank of England Deputy Governor Sarah Breeden<\/strong> expressed surprise at the <strong>UK economy&#39;s resilience<\/strong>, noting that businesses are absorbing energy shocks through cost management rather than passing them to consumers.<\/li>\n<li><strong>German Chancellor Friedrich Merz<\/strong> has rejected the current <strong>EU budget proposal<\/strong>, calling for deeper cuts and stating that no member state can afford the plan in its current form.<\/li>\n<li><strong>ECB Governing Council member Martins Kazaks<\/strong> signaled a lack of urgency for immediate rate hikes, citing opposing economic forces that allow the central bank to act &quot;without rush.&quot;<\/li>\n<li><strong>German leadership<\/strong> remains committed to reaching an <strong>EU budget deal by year-end<\/strong>, despite &quot;very tough&quot; negotiations over the \u20ac1.8 trillion-plus spending plan.<\/li>\n<\/ul>\n<h2>UK Economy Shows Unexpected Resilience<\/h2>\n<p>Bank of England (<a href=\"\/stock\/BOE\">BOE<\/a>) Deputy Governor <strong>Sarah Breeden<\/strong> highlighted a surprising level of stability in the UK economy following recent energy price volatility. Speaking on Thursday, Breeden noted that activity is &quot;not falling off a cliff&quot; and the <strong>labor market is holding up<\/strong> better than anticipated. She emphasized that UK businesses are increasingly focused on <strong>cost management and absorbing shocks<\/strong> internally, a shift from previous cycles where costs were more rapidly passed on to consumers.<\/p>\n<p>The central bank is currently evaluating whether the recent energy shock has fully dissipated or is merely delayed. Breeden\u2019s comments suggest that the <strong>Bank of England<\/strong> may have more breathing room in its inflation-fighting efforts if corporate behavior continues to dampen price pass-through. This resilience comes as a relief to policymakers who had feared a sharper downturn in the face of geopolitical tensions in the Middle East.<\/p>\n<h2>Germany Demands &quot;Affordable&quot; EU Budget<\/h2>\n<p>In Berlin, <strong>Chancellor Friedrich Merz<\/strong> warned of &quot;very tough&quot; negotiations ahead for the European Union&#39;s next long-term budget. Merz stated firmly that <strong>no EU member can afford<\/strong> the current budget proposal, which has seen its total volume swell to approximately <strong>\u20ac1.826 trillion<\/strong>. Germany, alongside other net contributors like Sweden and Austria, is pushing for cuts of several hundred billion euros to ensure the plan remains sustainable for those &quot;bearing the main burden of financing.&quot;<\/p>\n<p>Despite the friction, Merz anticipates an <strong>EU budget deal by year-end<\/strong>. He stressed that while Germany supports modernizing the budget to focus on <strong>competitiveness and defense<\/strong>, the overall spending level must be reduced. The Chancellor\u2019s stance puts Germany at odds with nations like France, which argue for a more robust budget to meet the continent&#39;s growing climate and security challenges.<\/p>\n<h2>ECB Maintains Patient Stance<\/h2>\n<p>The European Central Bank (<a href=\"\/stock\/ECB\">ECB<\/a>) is in no rush to adjust interest rates further, according to Governing Council member <strong>Martins Kazaks<\/strong>. Kazaks noted that the central bank is currently balancing &quot;opposing economic forces,&quot; including persistent inflation risks and slowing growth. He emphasized that the ECB can afford to act <strong>&quot;gradually and without rush,&quot;<\/strong> as past decisions have already moved policy into a restrictive range.<\/p>\n<p>Current market data shows the <strong>ECB&#39;s deposit facility rate<\/strong> sitting at <strong>2.50%<\/strong>, with officials closely monitoring wage growth and the potential for second-round inflation effects. While some policymakers have signaled that the case for further hikes is growing due to energy price pressures, the prevailing sentiment remains one of <strong>data-dependent caution<\/strong> as the Eurozone navigates a highly uncertain economic environment.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Bank of England Deputy Governor Sarah Breeden expressed surprise at the UK economy&#39;s resilience, noting that businesses are 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