SWEDEN: Flash June Inflation In Focus With August Cut In The Balance

The EU has recommended opening an excessive deficit procedure against Austria. This isn't too surprising a development. Last month's press conference from finance minister Marterbauer detailed Austria's targets for a budget gap of 4.5% and 4.2% of GDP in 2025/26 and plans to reach the EU's 3% of GDP budget gap target only in 2028 - marking a sizeable deterioration from 2025 deficit estimates in the range of 3.3-3.8% GDP as recently as Apr 3rd.

Some highlights from the EU release:

• "The Commission Spring 2025 Forecast projects a general government deficit of 4.4% of GDP in 2025 and 4.2% in 2026. Government investment is projected to remain at 3.9% of GDP in 2025 and to increase to 4.0% in 2026. Based on the Commission’s estimates, the fiscal stance is projected to be contractionary, by 1.3% of GDP, in 2025. The growth in nationally financed primary current expenditure in 2025 is projected to provide a contractionary contribution to the fiscal stance, amounting to 0.9% of GDP".
• "Overall, the debt sustainability analysis indicates high risks over the medium term. The baseline debt trajectory is sensitive to macroeconomic shocks. According to the stochastic projections, which simulate a large range of possible temporary shocks to macroeconomic variables, there is a high likelihood that the debt ratio in 2029 will be higher than in 2024".

EU Trade Commissioner Maros Sefcovic speaking at a press briefing at the OECD trade ministerial in Paris. Says that the main message at the talks "is strong support for multi-lateral ties [and a] strong rules-based system." In a similar line to that taken earlier, Sefcovic says that he had a "substantive and constructive discussion" with USTR Jamieson Greer, and that these talks will continue. On the escalation in US steel tariffs to 50% (calls it a "surprise"), Sefcovic he said he discussed the matter with Greer and that he "told him we strongly regret it, and it does not help negotiations." Says talks with the US "are covering all the issues". Sefcovic: "We clearly have the same challenges as the US on steel, which is global overcapacity."

• Sefcovic: "I still believe in negotiations with the US [and] believe we can achieve a positive result, but [we] are ready to defend our interests." Says that discussions on EU countermeasures are ongoing, "We are following a rules-based procedure".
• On other nations:
  • China: Sefcovic says he had a "focused" meeting with Chinese Commerce Minister Wang Wentao. Says "we are working hard to address issues and prepare for the July EU-China summit."
  • India: Says that talks focused on agriculture will allow the trade negotiation process to advance further.
  • Australia: Sefcovic says there has been "re-engagement in our free trade agreement negotiations" and he "believes we can achieve substantial progress this year."

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