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Euro’s Safe-Haven Status Grows, But Long-Term Stability Needs Structural Reform: S&P Analyst
The euro’s growing appeal as a global safe-haven currency signals a promising shift for Europe’s economic role on the world stage. However, according to Sylvain Broyer, Chief EMEA Economist at S&P Global Ratings, the momentum is far from guaranteed without substantial economic reforms and a stronger focus on domestic demand.
In a commentary published exclusively for Euroviews, Broyer emphasized that while recent market behavior reflects increased confidence in the euro during times of financial uncertainty, sustaining that trust requires more than fiscal stimulus packages. “Being viewed as a safe haven is not always a positive—it brings responsibility,” he noted, urging Europe to reconfigure its growth model to become more self-reliant.
Currently, the euro comprises only 20% of global foreign exchange reserves, compared to 58% for the US dollar. Though the euro is strengthening and trading closer to its fair value of around $1.15, Broyer warns that maintaining or improving this position hinges on significant policy shifts, particularly a move toward boosting domestic consumption over export reliance.
Europe’s deep-rooted dependency on global trade, especially with a trade model shaped by decades of adherence to the Washington Consensus, leaves it vulnerable. Should the US further restrict imports, Europe could face intense competition from Chinese products redirected toward European markets. China’s edge in production efficiency, regulatory flexibility, and technological development could pose a serious challenge.
To safeguard against this, Broyer advocates for expanding Europe’s domestic economy while preserving its commitment to free trade. He points to Germany’s stimulus efforts and rising EU-wide defence spending as initial steps in the right direction. Together, these initiatives could lift the eurozone’s GDP by up to half a percentage point annually by 2028—an impactful change for a region where growth typically hovers around 1.2%.
Still, the economist warns that Europe’s limited fiscal capacity, constrained by budgetary rules and a relatively small EU budget, will require more than short-term spending to achieve long-term resilience. “Reforms must begin with dismantling internal trade barriers,” Broyer said, citing IMF research indicating that aligning Europe’s internal trade efficiency with US interstate levels could boost per capita GDP by 7%.
Further gains could come from fully realizing the EU’s proposed Savings and Investment Union (SIU). OECD data suggests that even modest increases in market capitalisation could raise per capita GDP by 2.5%, improving investment in innovation and reinforcing the continent’s competitive edge.
Ultimately, Broyer concluded, the euro’s emergence as a reliable safe haven depends not only on short-term fiscal tools but also on deep, structural reforms. These would enhance the EU’s ability to withstand global shocks and reduce dependence on the US dollar—offering a path to a more autonomous and robust economic future.
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Iran Claims Strikes on US Bases as Hormuz Tensions Escalate
Iran’s Revolutionary Guards Corps (IRGC) said early Wednesday it had launched attacks against US military facilities in Bahrain and Kuwait, marking another escalation in the conflict as the United States continued military operations against Iran and renewed restrictions on Iranian shipping in the Strait of Hormuz.
The IRGC said it targeted the US Fifth Fleet’s command-and-control facilities, logistical centres, petroleum installations and military equipment in Bahrain, along with a US base in Kuwait. Iranian state media described the strikes as retaliation for recent American military operations and efforts to control maritime traffic through the Strait of Hormuz.
In a statement carried by local media, the IRGC warned that if Washington continued trying to restrict regional oil and gas exports by controlling key shipping routes, Iran would seek to disrupt other energy corridors serving US and allied interests. The statement declared that regional energy exports would be “for everyone or for no one,” although it did not specify which routes could be targeted.
Missile warning systems were activated in Bahrain and Kuwait as Iranian projectiles approached. Jordanian authorities said their air defence systems intercepted three incoming Iranian missiles, while Kuwait’s military reported repelling Iranian drone attacks. Iran also claimed it had targeted US military facilities at Jordan’s Azraq Air Base for a second time.
US Navy Admiral Brad Cooper, commander of US Central Command, confirmed that Iran had launched dozens of missiles and drones toward neighbouring Gulf countries.
The latest exchange came after the US military carried out a fourth consecutive night of operations against Iranian targets. According to US Central Command, fighter aircraft, drones and naval vessels conducted a seven-hour mission targeting Iranian missile and drone sites, naval assets and coastal defence systems.
CENTCOM said the strikes were intended to reduce Iran’s ability to threaten commercial shipping and civilian vessels operating in and around the Strait of Hormuz, a waterway that normally handles around one-fifth of the world’s oil and liquefied natural gas trade.
President Donald Trump also renewed warnings that the United States could expand its campaign if diplomatic efforts fail. In a televised interview with Fox News on Tuesday night, Trump said Washington would eventually target Iran’s energy infrastructure unless Tehran agreed to return to negotiations.
“We’re going to knock out all their power plants. We’re gonna knock out their bridges unless they get to the table and negotiate,” Trump said, adding that energy facilities remained potential targets.
The latest hostilities have cast further doubt over a temporary agreement reached in June after the United States lifted an earlier blockade of Iranian shipping to allow negotiations over Tehran’s nuclear programme. Talks have since stalled as military confrontations around the Strait of Hormuz intensified, raising concerns about regional security and the stability of global energy supplies.
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