A pillar of the NextGenerationEU programme, the Recovery and Resilience Facility (RRF) will expire on December 31, 2026. As of the end of August 2026, slightly more than three-quarters of the total budget had been disbursed (EUR 440 billion out of EUR 573 billion). Disbursing the remaining quarter (EUR 133 billion) by the end of the year will require a significant increase compared with the historical pace (EUR 90 billion per year). The goal of channeling these funds toward productive investment appears to have been achieved.
Equity indices, currencies, commodities, bond markets.
Six months have passed since the start of America’s and Israel’s military intervention in Iran and Lebanon. What picture is emerging around the impact of this external shock on the financing conditions of the major emerging economies and on exchange rate movements? And what parallels can be drawn with the 2022 energy shock?
Oil and gas markets lack direction amid persistent instability in the Strait of Hormuz. While oil prices have thus far reacted similarly to the two energy shocks (2022 and 2026), the rise in gas prices remains lower than the increase seen following Russia's invasion of Ukraine.
Equity indices, currencies, commodities, bond markets: Rates took off and tech slid further, leading Europe stock to outperform.
Emerging economies have so far withstood the energy shock caused by the conflict in the Middle East better than expected. The surge in oil, gas and energy-related input prices was rapid, but less inflationary than in 2022. While monetary policy easing cycles have been interrupted in many countries, most central banks have been able to keep their policy rates unchanged since last February. Emerging financial markets have not faced a widespread loss of confidence, while macroeconomic buffers are stronger than in the summer of 2022, helping to absorb the rise in energy costs.
Gathered in Sintra, Portugal, from 29 June to 1st July, the members of the ECB Governing Council adopted a notably cautious stance, just three weeks after raising key interest rates. This unanimous decision was in response to the energy shock triggered by the conflict in the Middle East. Since then, energy prices have fallen sharply, and the inflation and survey data from June have shown positive trends. However, the indirect effects of the energy shock are still difficult to assess fully. We maintain our scenario of an additional ECB rate hike in September, despite the easing of inflation risks, which makes such a move less likely.
In the years following the pandemic, labour productivity in Italy has stalled. Artificial intelligence is identified as a potential catalyst for reversing this trend, with projections indicating possible annual productivity growth increases of up to 1.1 p.p. in a scenario of rapid adoption. However, the actual adoption of AI in Italy is still low, despite a faster growth rate compared with its main Euro area counterparts. As of 2025, only 16.4% of Italian companies with more than 10 employees were using AI. In the financial and insurance sectors, adoption rates are above average (39%, peaking at 70% in insurance)
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Over a year has passed since the German government announced substantial investment plans in defence and infrastructure. As we assess the situation in mid 2026, the implementation of these plans is progressing as we had anticipated. However, the current impact of these investments on growth is proving to be more subdued than expected (notably because a portion of the infrastructure funds has been used to finance government current expenditure). Nonetheless, the rebound in industrial orders is becoming evident, and the increase in intra European trade directed towards Germany indicates that a positive momentum is developing.
Until the agreement extending the ceasefire (second half of June), European oil and gas prices had reacted more strongly to the energy shock caused by the war in the Middle East than they had to the shock that followed Russia’s invasion of Ukraine. This is no longer the case now that the prospects for a resumption of traffic through the strait of Hormuz are becoming more tangible.
The US regulatory framework is becoming more favourable to intermediation conditions within the US Treasuries market. The easing of leverage requirements has enabled the largest banks, known as Global Systemically Important Banks, or G-SIBs, to fulfil their role as intermediaries during the first months of the year. The ongoing reassessment of the G-SIB capital surcharge calculation method could also benefit market liquidity. However, the capacity of large US banks to absorb federal debt is expected to remain limited.
23 June will mark the tenth anniversary of the Brexit referendum, which led to the UK’s official exit from the European Union on 31 January 2020 (followed by a transition period). Since then, the country has indeed regained control over certain policy domains, such as trade, migration and regulatory frameworks. However, both the anticipation of Brexit and its actual implementation in 2021 have been linked to a decline in the country’s performance across several key indicators. Against a backdrop of escalating geopolitical tensions and mounting shared challenges, the UK is now seeking to re-establish practical collaboration with its main economic partner: the European Union.
