Thursday, 8 January 2026
Eurostat reported that Eurozone inflation fell to 2.0% in December 2025, down from 2.1% in November, aligning with the European Central Bank's target. The decline was attributed to a significant drop in energy costs, which fell by 1.9%, while core inflation decreased to 2.3%. Consumer price increases in Germany and France also slowed, registering at 2.0% and 0.7%, respectively.
Gazprom, Russia's state-owned gas company, reduced its gas supplies to Europe by 44% in 2025, delivering only 18 billion cubic meters (bcm), the lowest level since 1973. This decline follows the European Union's commitment to phase out all imports of Russian gas by the fall of 2027, amid ongoing geopolitical tensions and efforts to reduce reliance on Russian energy. As a result, China has emerged as Gazprom's largest export market, purchasing 38.8 bcm this year, albeit at significantly lower prices than European customers.
France, Germany, and Poland are advocating for the rapid conclusion of a free trade agreement between the EU and India, with a summit scheduled for January 27 to advance negotiations. French Foreign Minister Jean-Noel Barrot described the agreement as a "decisive step" in relations, while Polish Foreign Minister Radoslaw Sikorski emphasized the importance of signing the deal quickly. The EU is India's largest trading partner, accounting for 124 billion euros ($130 billion) in trade in goods in 2023.
European Commission President Ursula von der Leyen is set to travel to South America next week to finalize the EU's long-delayed trade pact with the Mercosur bloc, contingent on securing Italy's support in a crucial vote on Friday. To win over Italy, von der Leyen has proposed early access to €45 billion in agricultural funding, part of a broader €293.7 billion budget for farm spending after 2027, aimed at alleviating concerns among EU farmers. While Germany and Spain support the deal, opposition remains from France and Poland, leaving Italy as the key swing voter.
The European Commission is advancing a strategy to enhance the commercialisation of European open source software to bolster the continent's digital sovereignty, as outlined in a consultation published on January 6, 2026. The Commission asserts that while existing EU support for open source projects has yielded positive results, further measures are necessary to ensure these technologies can scale effectively and reduce reliance on non-European tech giants. The strategy, which will be detailed alongside the Cloud and AI Development Act expected in Q1 2026, aims to improve governance, address supply chain security, and promote financial sustainability for open source organizations.
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