New research strengthens calls for platform accountability while keeping privacy and children’s rights in focus

European Union governments are urging the European Commission to move quickly on stronger protections for children online, as new research documents widespread exposure to hateful content, privacy concerns and potentially harmful material. The emerging consensus gives Brussels political room to act, but it does not settle difficult questions about social media age limits, identity checks and young people’s right to participate online.

Representatives of all 27 EU member states discussed the issue during the Irish Council Presidency’s conference on online safety in Dublin, which concluded on Friday.

The Irish Presidency reported broad support for rapid and decisive European action. Ireland has offered to lead negotiations once the Commission presents a proposal responding to its expert panel on child safety online.

That is a significant political signal, but it is not a formal Council position or an agreement on legislation. Governments still differ over how age restrictions should work, which services should be covered and how users could demonstrate their age without surrendering unnecessary personal information.

Children describe a digital world of opportunity and risk

The debate has gained urgency from the latest EU Kids Online comparative survey, based on responses from 28,465 children aged 10 to 16 in 19 European countries.

Smartphones were the main route online, with 87% of respondents using a mobile phone to access the internet every day. Around two-thirds reported using artificial intelligence tools regularly, often for learning or practical assistance.

Children nevertheless expressed considerable unease about the systems surrounding them. Half were worried that their personal information was being used for targeted advertising, while four in ten feared companies were sharing their data with third parties without consent. Only 30% said they trusted technology companies to protect their privacy.

Exposure to harmful content was also common. Thirty per cent encountered hateful messages at least monthly. Forty per cent reported seeing violent or gory images, 39% encountered material about becoming extremely thin and 37% had seen content about physical self-harm.

These figures require careful interpretation. The study covers 19 countries, including several outside the EU, and should not be treated as a referendum involving every European child. It does, however, provide direct evidence of experiences that are often discussed primarily by politicians, parents and technology companies.

Young people question blanket bans

Evidence presented in Dublin complicates the case for a prohibition-led approach. In the Irish section of the research, 69% of children said teaching young people how to remain safe online would be preferable to banning social media. Sixty-seven per cent believed children would find ways around a ban.

Parents were more divided. Many expected social media restrictions to improve mental health, safety and concentration at school, but 43% also thought children would circumvent a prohibition.

Those findings do not establish that age limits are ineffective. They suggest that legal restrictions cannot carry the entire burden. A credible framework would also need enforceable safety-by-design requirements, accessible reporting systems, digital literacy and meaningful involvement by children in decisions affecting them.

Responsibility should not rest mainly with families. Parents cannot independently inspect recommendation algorithms, rewrite default privacy settings or alter commercial systems designed to maximise attention. Platforms exercise that control and should therefore carry proportionate duties to reduce foreseeable harm.

Age assurance must not become routine surveillance

The EU already has several instruments in this field. The Digital Services Act requires the largest platforms to assess and reduce systemic risks to minors, prohibits targeted advertising based on children’s data and restricts manipulative design. Brussels is also developing an age-verification system intended to confirm whether a user meets an age threshold without disclosing other identifying details.

As The European Times previously reported, the central challenge is protecting children without constructing an intrusive identity infrastructure or excluding them from education, culture, friendships and civic participation.

That balance will depend on technical and legal detail. Age assurance should collect as little information as possible, avoid retaining records of the services people visit and offer alternatives for those without compatible devices or identity documents. Independent scrutiny will also be essential, particularly if private contractors process sensitive information.

Rules must distinguish between services and levels of risk. A platform built around public recommendations, commercial profiling and contact with strangers does not present the same dangers as a school forum or a private family messaging service. A single restriction applied indiscriminately could be both disproportionate and difficult to enforce.

Consensus is only the beginning

The Dublin discussions give the Commission a mandate for urgency, but not permission to bypass evidence or fundamental rights. Stronger enforcement of existing rules may prove as important as new legislation, especially where platforms have already identified young users while failing to provide age-appropriate defaults.

Children need protection from exploitation, harassment and deliberately addictive systems. They also have rights to privacy, information, expression and participation. Europe’s next framework will be judged by whether it can uphold those rights together, rather than sacrificing one set in the name of another.

Technology-led services lifted output, but weaker retail activity and industrial pressures complicate the recovery

The UK economy grew by 0.4% in July, supported by technology, professional services and manufacturing. Yet the stronger national figure did not translate into a broad consumer recovery: retail activity declined, production and construction remained weaker over the latest three-month period, and high energy costs continued to weigh on businesses and households.

The latest Office for National Statistics estimate, published on Friday, showed that real gross domestic product increased by 0.4% from June. That followed monthly growth of 0.3% in June and no growth in May.

Output was 1.6% higher than in July 2025. Measured across the three months to July, a less volatile comparison than the monthly figure, the economy also expanded by 0.4%.

The result gives the UK a relatively firm start to the third quarter. However, the composition of the expansion shows an economy advancing at different speeds.

Technology and professional services lead

Services, which account for most UK economic activity, grew by 0.4% in July. Administrative and support services rose by 3.7%, while information and communication output increased by 2.4%.

Computer programming, consultancy and related activities expanded by 3.5% during the month. The industry alone contributed an estimated 0.12 percentage points to national GDP growth.

The ONS found that many of the businesses reporting the largest turnover increases in computer programming and information services were involved in artificial intelligence or cloud computing. It nevertheless cautioned that its data could not isolate or quantify the exact contribution made by those technologies.

Over the broader three-month period, professional, scientific and technical activities grew by 2.1%. Scientific research and development increased by 7%, while computer programming and related activities expanded by 4.4%.

The figures provide evidence of genuine strength in parts of Britain’s knowledge economy. They do not, however, establish that an “AI boom” alone is driving national growth. The category also includes conventional software, consultancy, data infrastructure and other digital services.

Consumer activity tells a weaker story

Consumer-facing services fell by 0.4% in July. Retail trade declined by 0.5%, reversing some of its gains from May and June, while the wider wholesale and retail sector was the largest negative contributor to both services and overall GDP.

Accommodation output rose by 2.6%, but that was not sufficient to offset weakness elsewhere. The ONS also recorded mixed effects from warm weather and the football World Cup, with some pubs, advertisers and drinks producers reporting higher turnover while some restaurants experienced weaker activity.

This distinction matters because GDP measures the value of production, not how evenly economic gains are distributed or whether household living standards are improving. A rise concentrated in business services can coexist with pressure on family budgets, subdued discretionary spending and difficult trading conditions on local high streets.

Those pressures form part of a wider European inflation and energy squeeze. The ONS reported that 59% of surveyed UK businesses expressed some concern about energy prices in late August, while 63% were concerned about fuel costs.

A mixed picture beyond services

Production output rose by 0.2% in July, helped by a 0.9% increase in manufacturing. Computer, electronic and optical products recorded particularly strong monthly growth, alongside pharmaceutical manufacturing.

Construction edged up by 0.1%, driven by repair and maintenance work, while new construction fell by 0.4%.

The three-month figures were less encouraging. Services grew by 0.6%, but production and construction each contracted by 0.5%. Public housing construction fell sharply over that period, while electricity supply, mining and parts of heavy manufacturing also weakened.

Early indicators for August suggest consumer demand may have softened again. Retail footfall decreased, particularly in town and city centres, while the estimated quantity of automotive fuel purchased per transaction grew more slowly as prices rose.

A harder interest-rate calculation

The expansion also complicates the outlook for monetary policy. The Bank of England’s July assessment kept Bank Rate at 3.75% and warned that inflation was likely to rise as higher global energy costs reached household bills, transport and supply chains.

The Bank projected that consumer-price inflation could average 3.2% in the final quarter of 2026, remaining above its 2% target. At the same time, it described underlying demand as subdued and expected weak household income growth and restrictive financial conditions to restrain the economy.

July’s GDP number reduces immediate fears of stagnation, but one monthly estimate is unlikely to settle that debate. Stronger activity can make an interest-rate reduction less urgent, while persistent energy-led inflation may increase pressure to keep borrowing costs high. Conversely, weak consumer demand and spare capacity argue against excessive tightening.

The figures are preliminary and will be revised as more information becomes available. For now, they point to a resilient but uneven economy: expanding digital and professional sectors, some improvement in manufacturing, and households still navigating elevated prices and restrained spending power.

The central question is therefore not only whether Britain can generate growth, but whether that growth can spread beyond a narrow group of industries into wages, investment, housing and everyday commerce. July offered a stronger headline. Evidence of a broad recovery remains less conclusive.

After 20 years of waiting, the community is preparing a legal challenge to Belgium’s system for recognising religions and philosophical organisations

Belgium’s Buddhist community has given the federal government until 30 September to respond to its long-delayed request for official recognition. The possible legal challenge places renewed scrutiny on a system that grants significant public benefits to recognised communities but has already been found by the European Court of Human Rights to lack sufficient safeguards against arbitrary treatment.

The Belgian Buddhist Union applied for recognition in March 2006. On 15 July this year, it formally placed the federal government on notice, according to a statement published by the organisation.

Its president, Carlo Luyckx, argues that the 20-year delay has become discriminatory. The union says it will begin judicial proceedings if it does not receive a satisfactory response by the end of September. It has also raised the prospect of eventually taking the case to the European Court of Human Rights, although any application to Strasbourg would normally require available domestic remedies to be exhausted first.

Justice Minister Annelies Verlinden’s office has said that she intends to meet representatives of the Buddhist community. The government maintains that work is under way on a general legal framework covering the recognition of religions and non-confessional philosophical organisations.

A bill that reached Parliament and then lapsed

The Buddhist application had already advanced much further than a preliminary administrative request.

In March 2023, Belgium’s Council of Ministers approved draft legislation that would have recognised Buddhism as a non-confessional philosophical organisation and the Belgian Buddhist Union as its representative body. The proposed structure included a federal secretariat, local Buddhist communities and publicly remunerated Buddhist delegates.

A revised version was approved in December 2023 after opinions from the Council of State and the Data Protection Authority. The bill was submitted to the Chamber of Representatives on 22 January 2024.

It did not become law. The parliamentary record shows that the proposal lapsed when the Chamber was dissolved in May 2024.

The present coalition has opted to pursue a uniform recognition framework rather than immediately reviving the Buddhist bill. A common statutory process could make Belgium’s system more coherent. For the Buddhist community, however, it means another period of uncertainty after the government had already drafted and twice approved legislation addressing its application.

Recognition carries material consequences

Belgium currently recognises six religions at federal level: Roman Catholicism, Protestant-Evangelical Christianity, Anglicanism, Judaism, Islam and Orthodox Christianity. Organised secularism is separately recognised as a non-confessional philosophical organisation.

Buddhism and Hinduism remain outside the recognised system, although their representative organisations receive subsidies intended to support their institutional development.

The distinction is more than symbolic. Article 181 of the Belgian Constitution provides for the state to pay the salaries and pensions of ministers of recognised religions and delegates of recognised non-confessional organisations. Recognition can also affect local institutional structures, representation, religious assistance and tax treatment.

The classification sought by the Buddhist Union has itself generated debate. The organisation considers Buddhism a non-theistic philosophical tradition and therefore seeks recognition as a non-confessional organisation. Representatives of organised secularism have argued that its temples, rituals, monastic traditions and ceremonies place it within the category of religion.

Whatever classification lawmakers ultimately choose, the more immediate rights question concerns the availability of a transparent procedure capable of reaching a decision within a reasonable period.

Strasbourg’s warning to Belgium

That issue has already reached the European Court of Human Rights in a case involving nine Jehovah’s Witness congregations.

In April 2022, the Court unanimously found that Belgium had discriminated against the congregations after a Brussels rule restricted a property-tax exemption to buildings used by recognised religions. The decision found a violation of the prohibition of discrimination when read together with freedom of religion and protection of property.

As The European Times reported following the judgment, the Court identified a deeper problem in the federal recognition mechanism. Recognition could proceed only on the initiative of the justice minister and ultimately depended on legislation, while the applicable procedure and criteria were not established in law with sufficient guarantees of fairness and objectivity.

The Court described this arrangement as carrying an inherent risk of arbitrariness. It did not rule that every religious community has an automatic right to recognition, public financing or tax privileges. States retain considerable discretion over their systems of church-state relations.

Once public authorities attach important advantages to recognition, however, access to those advantages cannot depend on a discriminatory or insufficiently safeguarded process.

Implementation of the 2022 judgment remains under the supervision of the Council of Europe’s Committee of Ministers. In December 2025, the Department for the Execution of Judgments discussed the case with Belgian authorities during a mission to Brussels, including the absence of regulated recognition procedures and criteria.

Equal treatment must extend beyond Buddhists

The recognition debate is not solely about Belgium’s Buddhist community. Any reformed procedure must be equally accessible to Hindus, Scientologists, Jehovah’s Witnesses, Bahá’ís, members of the Church of Jesus Christ of Latter-day Saints, commonly known as Mormons, and every other religious or belief community.

The OSCE/ODIHR-Venice Commission guidelines state that communities seeking legal personality should have a fair opportunity to obtain it and that the applicable criteria must be applied without discrimination. Access should be voluntary: the exercise of freedom of religion or belief cannot be made dependent on prior state permission.

Legal personality is not identical to Belgium’s more advantageous status as a recognised religion or philosophical organisation. It ordinarily enables a community to perform basic institutional acts such as holding property, operating bank accounts, employing staff and entering contracts. Belgian recognition can additionally open access to public salaries, pensions, institutional representation, local structures and certain tax advantages.

The OSCE standards do not oblige Belgium to fund every religious or belief community automatically. They do require access to the relevant legal status and any associated advantages to be governed by objective, transparent and non-discriminatory rules.

That principle must apply regardless of a community’s size, age, theology or public popularity. The state may establish proportionate legal requirements, but it should not favour historically established religions, make judgments about the legitimacy of unfamiliar beliefs or leave minority applications unresolved indefinitely.

A credible Belgian reform would therefore provide every religious or belief community with a defined application route, published non-discriminatory criteria, a decision within a reasonable period and access to independent review. Recognition may still depend on satisfying lawful conditions, but the opportunity to apply and receive a reasoned decision must belong to everyone equally.

INSEE cuts its 2026 forecast as purchasing power, jobs and investment weaken

France’s economy is expected to grow by only 0.4% in 2026, with declining household purchasing power, weak investment and rising unemployment leaving the euro area’s second-largest economy increasingly dependent on exports. The outlook points to stagnation rather than recession, but the recovery remains narrow and vulnerable.

The revised forecast, published in the September economic outlook from France’s national statistics institute, INSEE, follows a 0.2% contraction in the first quarter and zero growth in the second.

INSEE expects activity to increase by just 0.1% in the third quarter and 0.2% in the final three months of the year. That would keep annual growth positive, but at roughly one-third of the pace forecast for France’s major euro-area neighbours and the United Kingdom.

A recovery without domestic momentum

The underlying concern is not simply the low headline growth rate. Household consumption, business investment and residential activity are all struggling to provide momentum at the same time.

Household purchasing power is forecast to fall by 0.4% over the year as salaried employment declines and wage increases struggle to keep pace with renewed price pressure. Consumption is still expected to rise by 0.3%, but only partly because households are drawing on savings.

The national household saving rate is forecast to decline from 17.8% in 2025 to 17.3% this year. That remains high, but the direction suggests that some families are using accumulated reserves to maintain spending rather than benefiting from stronger income growth.

The burden will not be evenly shared. Lower-income households generally spend a greater proportion of their earnings on food, energy, transport and housing. They also have less capacity to absorb higher prices by reducing savings.

Employment weakens as prices rise

The labour market is adding another source of pressure. France is expected to lose 52,000 salaried positions during 2026, after a decline of 48,000 last year. An estimated 95,000 additional self-employed jobs would keep total employment slightly positive, although such work can include less secure or lower-income activity.

Unemployment is projected to reach 8.6% by the end of the year. The latest INSEE economic indicators already show the rate rising to 8.3% in the second quarter, while payroll employment fell by 0.1%.

Inflation, meanwhile, is expected to accelerate from 2.4% in August to 2.9% in December. Energy costs remain an important driver, but INSEE also anticipates pressure from transport services, manufactured goods and fresh vegetables affected by extreme heat.

The combination reflects the wider inflation and growth squeeze confronting Europe. France’s difficulty is that wages and employment are less dynamic than in several neighbouring economies, limiting households’ ability to absorb another increase in living costs.

Investment retreats

Companies are also becoming more cautious. Business investment is forecast to decline by 0.3% in 2026, reversing the 0.7% increase recorded last year. Weak demand and a rising cost of capital are making projects more difficult to justify, while higher energy costs are squeezing margins.

Household investment is expected to fall by 1.3%. New construction has shown some improvement, but higher borrowing costs are weighing more quickly on existing-home transactions and the services connected to them, including renovation and property-related activity.

Public investment is also projected to decline, partly because municipal construction spending has weakened during the local electoral cycle. The result is a broad investment slowdown at a time when France still needs substantial expenditure on housing, energy efficiency, industrial renewal and climate adaptation.

Heat leaves an economic mark

Exceptional heat added to the slowdown. INSEE estimates that the summer’s heatwaves will reduce annual growth by approximately 0.1 percentage point, mainly through lower agricultural production.

France experienced 53 heatwave days between mid-June and the end of August. Maize, oilseeds, potatoes, animal feed and wine production were among the areas affected, while vegetable shortages contributed to higher fresh-food prices.

Construction activity also suffered, and high temperatures increased electricity demand while temporarily limiting nuclear generation. These effects do not explain the entire economic divergence, but they demonstrate how climate disruption is becoming a measurable economic risk rather than a separate environmental concern.

Exports prevent a worse result

Foreign trade is expected to provide the clearest support to growth, particularly through aerospace equipment and civilian and military shipbuilding. However, the trade contribution also reflects weak domestic demand suppressing imports.

An economy supported by competitive exports can be resilient. An economy relying on exports because households and companies are cutting back presents a less reassuring picture. The composition of France’s projected growth therefore matters as much as the annual figure.

INSEE’s forecast remains subject to uncertainty, including energy prices, geopolitical tensions and the full economic effect of the summer heat. France has not entered a confirmed recession, and business sentiment improved in August. Yet the anticipated return to growth is too modest to resolve the pressure on living standards, employment and investment.

Draft framework links visa-free travel to new security exchanges while leaving decisive privacy limits to later national agreements

The European Commission has proposed a framework for exchanging traveller information with the United States, seeking to preserve visa-free transatlantic travel while establishing common data-protection rules. The proposal could enable automated identity and fingerprint queries, followed by more detailed exchanges when a security match is confirmed. It does not itself authorise access to national databases, but it would shape the bilateral agreements that determine which information is ultimately shared.

The Commission presented the draft on 10 September after negotiating with Washington under a mandate granted by EU governments in December 2025. The initiative responds to a US requirement that countries participating in the Visa Waiver Program establish an Enhanced Border Security Partnership by the end of 2026.

The programme allows citizens of participating countries to travel to the United States without a visa for stays of up to 90 days. That convenience now gives Washington considerable leverage as European institutions consider whether greater information exchange can be reconciled with EU privacy law.

A framework, not immediate database access

The most important limitation is contained in the Commission’s proposed framework agreement: the instrument would not, by itself, provide a legal basis for transferring personal information.

Exchanges could occur only under separate bilateral agreements between the United States and individual EU countries. Those agreements would have to identify the national information systems involved, specify the categories of information available and establish procedures and volume limits.

This distinction matters. Brussels has negotiated the common architecture, but the practical reach of the system would depend on country-by-country decisions that have not yet been made public.

The draft covers EU citizens, US nationals and third-country nationals. Denmark is excluded under its position on the Schengen acquis, while the framework would apply to Ireland only if the EU subsequently notified the United States.

How the screening process would work

The proposal establishes a two-stage process. During a border check or the assessment of a visa or travel-authorisation application, an authority could submit an automated query when there is reason to believe that the person may present a serious and genuine risk to public security or public order.

Possible grounds include suspected identity fraud, doubts about travel documents, apparently false application information or risk assessments based on suspicious activity and criminal intelligence. A connection must also exist between the traveller and the country being queried, such as citizenship, residence or a previous stay.

The initial query could contain biographical details, a national identification number or fingerprints. A positive match could return confirmation of the match, basic identity information and, where domestic law permits, a photograph.

A second request could then seek additional information from databases named in the bilateral agreement. This stage would require a human assessment by the authority holding the records. Special-category information, which the framework defines as potentially including political opinions, religious beliefs, health information and details concerning sexual life, could generally be transferred only when particularly relevant to the security purpose. Biometric data used to identify a person are treated separately.

Safeguards carry significant qualifications

The agreement contains protections concerning accuracy, information security, access, correction and administrative or judicial redress. It requires independent oversight, prohibits arbitrary discrimination and says information should be relevant and no broader than necessary.

Authorities transferring data onward to a third country or international organisation would normally need the prior consent of the authority that originally supplied it. Retention periods would have to be specified in the applicable legal framework and reviewed at least annually.

However, several protections depend on domestic implementation. The provision governing automated decisions does not create an absolute prohibition: a decision causing significant adverse consequences could still rely solely on automated processing when domestic law authorises it and safeguards include the possibility of obtaining human intervention.

Transparency may also take the form of a general published notice rather than direct notification to each affected traveller. Access to records can be restricted for national security, law-enforcement or investigative reasons. For a person wrongly matched at an airport, the practical value of redress will depend on how quickly an authority can identify and correct the error.

These questions echo concerns surrounding Europe’s own expanding biometric border infrastructure. A recent European Times examination of the Entry/Exit System found that formal rights are effective only when travellers receive understandable information and can obtain timely human assistance.

The decisive negotiations come next

The proposal now enters an institutional process. The Council must decide whether to authorise signature and provisional application. The European Parliament’s consent would be required before the agreement could be formally concluded.

The political debate is likely to focus less on the principle of border-security cooperation than on the breadth and enforceability of its limits. Reporting on the negotiations has already identified concern among lawmakers and national governments over sensitive information and the scope of future US access.

The year-end American deadline adds urgency, but it should not reduce parliamentary scrutiny to a choice between unrestricted data exchange and the loss of visa-free travel. The framework expressly relies on reciprocity, necessity and proportionality. Those principles will need measurable expression in every bilateral agreement.

Governments should therefore disclose which databases they intend to connect, the maximum number of queries, the rules governing false matches and the authorities responsible for complaints. Regular statistics should show how often queries are made, how many produce matches and whether those matches lead to adverse travel decisions.

Protecting visa-free travel is a legitimate public objective, as is identifying people who present a demonstrable security risk. The credibility of the agreement will nevertheless depend on whether security cooperation remains targeted, contestable and subject to effective independent supervision. The framework sets the boundaries on paper; the bilateral negotiations will reveal how much protection those boundaries provide in practice.

Higher inflation prompts a second increase this year despite resilient euro-area growth

The European Central Bank has raised its key interest rates by a quarter percentage point, responding to an energy-driven resurgence in inflation that is placing renewed pressure on household budgets across the euro area. The decision takes the deposit facility rate to 2.50% and signals that policymakers are prepared to accept higher borrowing costs while inflation remains persistently above the ECB’s 2% target.

Rates rise after July pause

The ECB’s Governing Council, meeting in Berlin on Thursday, increased all three official rates by 25 basis points. The deposit facility will rise to 2.50%, the main refinancing rate to 2.65% and the marginal lending facility to 2.90% from 16 September.

The move is the bank’s second increase of 2026. It follows a June rise and a pause in July, when policymakers sought more evidence about the duration and wider economic effects of the energy-price shock.

In its September monetary policy decision, the ECB said conflict in the Middle East was continuing to generate inflationary pressure. It expects price growth to remain well above target for an extended period but declined to commit itself to another increase.

Future decisions will remain dependent on economic data, the inflation outlook and evidence about how monetary policy is passing through to businesses and households.

Energy costs drive inflation higher

Euro-area annual inflation rose to an estimated 3.3% in August, from 2.9% in July. The increase was heavily concentrated in energy, where annual price growth accelerated to 14.3%.

The latest Eurostat flash estimate showed a more restrained picture elsewhere. Services inflation eased to 3.0%, while food, alcohol and tobacco prices increased by 1.2%. Inflation excluding energy and food edged down to 2.4%, according to the ECB.

That distinction matters. Interest rates cannot produce more oil or gas, reopen a disrupted shipping route or end a conflict. The central bank’s concern is that a prolonged energy shock could spread into transport, production, retail prices, wage negotiations and inflation expectations.

The longer businesses expect their costs to remain elevated, the greater the risk that temporary increases become embedded across the economy. Higher rates seek to contain that process by moderating demand and signalling that the ECB will defend its price-stability mandate.

Inflation forecast raised beyond this year

The ECB expects headline inflation to average 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. Its 2026 estimate is unchanged from June, but the projections for the following two years have been raised.

Underlying inflation is also forecast to remain persistent. Inflation excluding energy and food is projected at 2.5% this year, 2.6% in 2027 and 2.3% in 2028.

At the same time, the bank has upgraded its growth expectations. It now forecasts euro-area economic expansion of 0.9% in 2026, 1.4% in 2027 and 1.5% in 2028. The revisions for this year and next reflect stronger-than-expected private consumption, public expenditure and business activity.

That resilience gave policymakers more room to raise rates. Yet it does not remove the risk of weaker growth if energy supplies deteriorate, geopolitical tensions intensify or credit conditions tighten more sharply than anticipated.

Unequal effects on households and firms

The consequences will vary considerably across the euro area. Borrowers with long-term fixed-rate mortgages may see little immediate change, while households seeking a new loan or refinancing an existing one are more exposed. Variable-rate borrowers could face faster increases, depending on national lending structures and the terms of their contracts.

Smaller companies that depend on bank finance may also encounter higher borrowing costs. Businesses operating with narrow margins face pressure from both sides: more expensive energy and more costly credit. Larger companies with access to bond markets or substantial cash reserves generally have more options.

The decision therefore deepens the policy dilemma described earlier in The European Times’ coverage of Europe’s renewed inflation squeeze. Measures intended to control future price growth can impose immediate costs on indebted households, tenants whose landlords face refinancing pressures and enterprises considering new investment.

Governments can soften the social impact, but the ECB has urged them to keep energy assistance temporary and targeted. Broad subsidies may be expensive, disproportionately benefit high-consuming households and sustain demand when monetary policy is attempting to restrain it.

No predetermined path

The ECB’s language suggests vigilance rather than a declared cycle of repeated increases. Much will depend on whether energy inflation begins to retreat, whether higher costs spread into wages and non-energy prices, and whether the economy continues to withstand tighter financing conditions.

For households, the immediate picture is uncomfortable: essential energy costs are rising while credit is becoming more expensive. For policymakers, the central question is whether acting now prevents a longer and more damaging inflation problem, or places an excessive burden on an economy facing shocks that interest rates cannot directly resolve.

The bank’s next decisions will reveal how it balances those risks. Its September move makes one priority clear: stronger growth forecasts have not displaced price stability at the centre of euro-area monetary policy.