Prepared by Adam Baumann, Cristina Checherita-Westphal, Georgi Kocharkov, Steffen Osterloh Published as part of the ECB Economic Bulletin, Issue 5/2025. Fiscal policies in the euro area are increasingly shaped by a focus on defence spending in response to heightened geopolitical tensions. The February 2025 Munich Security Conference, the launch of the European Commission’s Preparedness Union Strategy in March and the conclusions of the June 2025 NATO Summit all underscored EU governments’ commitment to increasing defence spending. This box uses data from the ECB Consumer...

Prepared by Adam Baumann, Luca Caprari, Maarten Dossche, Georgi Kocharkov and Omiros Kouvavas Consumer confidence plays an important role in determining economic activity. Thanks to timely availability and close co-movement with economic activity, analysts and policymakers closely monitor consumer confidence indicators to help them assess the strength of the economy (Barsky and Sims, 2012; Dees and Brinca, 2013; Ludvigson, 2004). They typically summarise information about consumers’ perceptions of current and future economic conditions and expectations for households’ financial situations and their...

By Vladimir Klyuev, James Tebrake, IMF The updated System of National Accounts better captures digitalization, intangible assets, and global production—helping governments support growth, jobs, and investment The cornerstones of our digital world—from smartphone apps to new digital assets and artificial intelligence tools—didn’t exist back in 2008, the last time the world’s statistical community overhauled its approach to standardizing how countries measure the economy. Now, an updated System of National Accounts—the global standard for producing measures of economic activity—more fully incorporates emerging technologies, digital services,...

By Piero Cipollone, Member of the Executive Board of the ECB Digital payments are increasing and people are using banknotes and coins less frequently. Is cash on the way out? Piero Cipollone explains why cash is still indispensable and how the ECB is working to ensure it remains readily available and easy to use. The role of cash has been hotly debated in recent years, especially as the pandemic-driven surge in digital payments has reduced its share in day-to-day transactions, triggering...

The Commission has today adopted a recommendation on voluntary sustainability reporting for small and medium-sized companies (SMEs). The recommendation presents a voluntary standard that will make it easier for SMEs that are not covered by the Corporate Sustainability Reporting Directive (CSRD) to respond to specific requests for sustainability information from large financial institutions and companies. The voluntary standard for SMEs (VSME) was developed by EFRAG, the Commission's technical advisory body for sustainability reporting. The Commission encourages large companies and financial institutions that seek sustainability...

By Vladimir Klyuev and James Tebrake The updated System of National Accounts better captures digitalization, intangible assets, and global production—helping governments support growth, jobs, and investment The cornerstones of our digital world—from smartphone apps to new digital assets and artificial intelligence tools—didn’t exist back in 2008, the last time the world’s statistical community overhauled its approach to standardizing how countries measure the economy. Now, an updated System of National Accounts—the global standard for producing measures of economic activity—more fully incorporates emerging technologies, digital...

By Niccolò Battistini and Johannes Gareis Monetary policy has an impact on our daily lives. This post explores the ripple effects of the ECB’s recent monetary policy on housing affordability, housing sales and households’ home goods consumption. Monetary policy decisions affect the economy by influencing how much people can afford, invest and consume. The housing market is an important channel for this: changes in monetary policy affect mortgage interest rates, which in turn affect housing sales. However, since buying a home...