Week Ahead (1 September)

Monday, 1 September – Eurozone flash inflation estimate for August 

Today, Eurostat will release the Eurozone flash inflation estimate for August. The release comes in the immediate aftermath of the ECB’s publication of the minutes from its July meeting and weeks after Brussels and Washington agreed to cap US tariffs on EU exports at 15%, easing immediate concerns of a more disruptive outcome. 

The minutes of the July meeting, when the ECB opted to hold interest rates steady at 2%, confirmed the Governing Council’s “wait-and-see” stance after cutting rates aggressively over the past year. They showed a central bank that feels it has largely completed its disinflation task, with President Christine Lagarde reiterating that the ECB is in a “good place.” Earlier this month, Lagarde noted that the EU–US tariff deal had “mitigated but not eliminated” global uncertainty. 

The July inflation release, which arrived just after the ECB meeting, showed euro area headline inflation stable at 2.0%, which is in line with the ECB’s price stability target and EU-wide inflation edging up to 2.4%. Latest economic indicators continue to point towards resilience. The August flash composite PMI rose to 51.1, extending an eight-month expansion streak. Derivatives markets now assign only a 5% probability of a rate cut at the ECB’s next meeting on 24 September and less than a 40% probability of any further easing this year. Investors are awaiting the ECB’s updated staff projections in mid-September, which will fully incorporate the trade deal’s tariff assumptions. 

Against this backdrop, August’s flash inflation data will provide a good indication on whether recent stability around the 2% mark represents a durable stabilisation of price dynamics or whether persistent services inflation could force the Governing Council to delay any additional easing later in 2025. 

Wednesday, 3 September – DG Trade chief faces MEPs after Commission tables EU-US joint framework proposal 

On Wednesday, the Director General of DG COMP, Sabine Weyand, will appear before MEPs in a Q&A session that comes just days after Brussels unveiled two proposals designed to operationalise the EU–US joint framework on tariffs and trade defence. Last Wednesday, the Commission tabled two legislative proposals designed to anchor Brussels’ response to Washington’s tariffs within the new joint EU–US framework agreed earlier this summer. 

Nevertheless, despite the deal on a joint framework, the US has once again renewed tariff threats: last week President Trump renewed his criticism of the EU’s flagship digital regulations, the Digital Services Act (DSA) and Digital Markets Act (DMA), once again warning that their enforcement may trigger additional tariffs and even targeted sanctions against European officials. 

Also last week, Weyand acknowledged the limited room for manoeuvre available to Brussels vis-a-vis Washington. She pointed to the Commission’s proposals and underlined that the EU has secured a commitment on “retroactive relief” from Washington, allowing European companies affected by recent tariff measures to recover costs if an eventual agreement is reached. In her words, this is “not a perfect solution, but better than no safety net at all.” 

Member States and senior officials, however, continue to diverge on tone. While Commission President Ursula von der Leyen has sought to present the joint framework as a constructive channel for engagement, Executive Vice President in charge of competition policy, Teresa Ribera, argued in an interview with FT that “Europe must be prepared to defend its industries with equal determination. Our credibility is at stake.”  

In previous days, the Parliament has voiced concerns that the retroactive relief mechanism and related proposals may fall short of providing real leverage in the face of escalating US protectionism and continuous threats against the EU’s regulatory approach. Weyand’s appearance will therefore test the Commission’s ability to reassure MEPs that the framework has substance beyond damage limitation and that it will not compromise the enforcement of its digital rulebook on US tech firms for the sake of appeasing the White House.  

Wednesday, 3 September – Deadline for public feedback on DG COMP’s merger guidelines review 

Wednesday marks the deadline for submissions to the European Commission’s ongoing consultation on the merger guidelines review, launched in May to update both the 2004 horizontal and 2008 non-horizontal rules. The exercise, due to conclude in 2027, was mandated by Commission President von der Leyen and competition chief Teresa Ribera to ensure that merger control reflects broader policy objectives such as sustainability, resilience and innovation. 

The review follows last year’s Draghi Report on European competitiveness, which urged a rethinking of EU competition policy to enable the creation of globally competitive firms. Although DG COMP officials, including the recently retired former Director-General Olivier Guersent, have stressed that the review is an “evolution, not a revolution”, it is politically significant given pressure to reconcile strict merger control with industrial policy goals. 

So far, industry feedback in response to the review has been divided: telecom operators, led by Telefonica, have warned that the review risks producing only marginal changes, while consumer groups such as BEUC caution against loosening standards in concentrated sectors like telecoms and airlines. Efficiencies are widely seen as the central issue, even though many respondents have criticised the consultation for not asking how the framework should change.  

It remains to be seen in the coming months whether the outcome of the consultation will reinforce continuity more than change. Nevertheless, the Commission’s position already appears to have shifted to being much more sympathetic to consolidation. A recent Commission discussion paper on efficiencies cited the Orange/Jazztel merger as a case where efficiency claims were partially accepted – this is seen by some as a precedent for greater flexibility. The outcome of this consultation process will likely be used to underline this shift.  

Wednesday, 3 September – European Commission to present second part of its new long term budget for 2028-2034 

This week, the European Commission will publish the second batch of sectoral proposals under its long-term budget for 2028–2034, following the first MFF package and own resources proposal presented on 16 July. The July plan set out a budget of almost €2 trillion shifting priorities toward competitiveness, technology and industrial resilience, while reducing the share for cohesion and agriculture. 

Headline measures included €175 billion for research and development, €54.8 billion for digital, and €38 billion for deep tech, underpinned by the creation of a European Competitiveness Fund (ECF) consolidating instruments across digitalisation, cleantech, defence and biotech. Horizon Europe will continue as the EU’s flagship research programme but with stronger coordination with the ECF. National Partnership Plans were introduced as the main channel for cohesion spending, giving governments more discretion over allocation while aligning with EU objectives. 

This week’s proposal will provide legal and sectoral detail across multiple programmes, clarifying specific allocations within the four main budget headings: cohesion, agriculture and security (€1.06 trillion); competitiveness and prosperity (€589 billion); Global Europe (€215 billion); and administration (€118 billion). They will also touch on the controversial own resources plan, which includes proposals for new revenue streams such as a corporate contribution (CORE), CBAM, VAT, plastics, electronics and ETS proceeds.  

The Commission’s July package already reflected this shift by tripling the budget of the European Innovation Council and designing industrial decarbonisation, defence and space as core funding categories. However, several of these changes could face strong political resistance, with unanimity required in Council. 

Key decisions on budget size, allocation, and programme governance will be subject to interinstitutional negotiations with the Council and European Parliament, with final adoption not expected before late 2027. 

Wednesday, 3 September – General Court decision on Zalando’s challenge of VLOP DSA designation 

Also on Wednesday, the EU’s General Court will rule on Zalando’s legal challenge against its designation as a very large online platform (VLOP) under the Digital Services Act (DSA). Zalando filed the complaint in June 2023, making it the first company to contest the Commission’s landmark online content law in court. 

The Act introduces obligations for categories of companies which are defined according to the size of their userbase.  Particularly stringent requirements are placed on VLOPs and very large online search engines (VLOSEs), defined as services with more than 45 million active users in the EU area.  Smaller companies, including start-ups and microenterprises, are exempted from some of these obligations.  The Commission has oversight of VLOPs and VLOSEs for the purposes of the act with the assistance of member states. 

The European Commission, in April 2023, designated a total of 19 companies as very large online platforms subject to the DSA, including TikTok, Twitter, and Zalando. However, Zalando argues that it does not meet the criteria for such a designation, criticising the Commission for its lack of transparency and consistency in determining which platforms qualify. According to Zalando, the Commission’s classification overlooks the company’s primarily retail business model and strict content moderation process. Also, the retailer insists that it does not pose the same systemic risks associated with major tech companies and should not be subject to the same obligations under the DSA.  

The case is being closely watched as a test of how the EU courts will handle disputes over the Commission’s supervisory role under the DSA. It also comes as the General Court reviews Amazon’s separate challenge. In October 2023, judges granted Amazon a partial suspension of its obligation to provide data to the Commission’s ad repository, citing risk of serious commercial harm, but rejected broader attempts to suspend DSA compliance. A final ruling on Amazon’s core challenge is expected later this year.