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ECB Expected to Raise Rates as Energy-Driven Inflation Complicates Decision

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The European Central Bank is widely expected to raise interest rates on Thursday, with financial markets placing the probability of a quarter-point increase close to 100%. The move would lift the ECB’s deposit rate from 2.25% to 2.5%.

The decision comes as eurozone inflation has climbed sharply, although much of the increase has been driven by energy costs rather than broad price pressures. This has created a difficult policy choice for the central bank as underlying inflation continues to ease.

The ECB raised rates on June 11 for the first time in three years, increasing the deposit rate from 2% to 2.25% following an energy shock linked to the Iran war. Policymakers then kept rates unchanged in July, while ECB President Christine Lagarde signalled that September could bring another increase.

August inflation figures strengthened expectations for action. Eurozone inflation reached 3.3%, up from 2.9% in July and its highest level since September 2023. Energy inflation surged to 14.3%, compared with 10.3% the previous month.

However, measures that exclude volatile components showed a different picture.

Core inflation, which excludes energy, food, alcohol and tobacco, fell to 2.4% from 2.5%. Services inflation also declined, dropping to 3% from 3.3%. The figures suggest that higher energy prices have not yet generated widespread increases in other prices.

This distinction is important for the ECB because policymakers closely watch so-called second-round effects, in which an initial energy shock spreads through wages, services and other parts of the economy.

ECB economists said in a research paper published Tuesday that adverse energy supply factors linked to geopolitical tensions accounted for about 90% of the increase in energy inflation between January and May.

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The current situation differs from the 2021-22 inflation surge, when both supply disruptions and strong demand contributed to rapidly rising prices.

Inflation has also varied considerably across major eurozone economies. August inflation reached 4.5% in Spain, compared with 2.9% in Germany and 2.7% in France, despite the countries facing the same broad energy shock.

Economic growth adds another complication. The eurozone economy has performed better than expected, supported partly by fiscal measures and changes in international trade conditions. ING analysts described the expected ECB move as an insurance increase that would keep the deposit rate within the range considered broadly neutral.

The global policy environment is also shifting. The US Federal Reserve is due to meet on September 15 and 16, while the Bank of Japan will meet on September 17 and 18. The Bank of England is expected to keep its rate at 3.75% on September 17.

A US rate increase could strengthen the dollar against the euro, potentially making European exports more competitive but increasing the cost of dollar-priced energy imports.

The ECB therefore faces a difficult balance: raising borrowing costs to contain inflation that is largely being driven by energy, while avoiding unnecessary pressure on an economy that may still require support.

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Uruguay Tops Global Retirement Ranking as Europe Dominates Top 10

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Uruguay has overtaken Portugal to become the world’s top retirement destination in a new global ranking, although Europe remains the strongest region overall with six countries among the top 10.

The 2026 retirement index by Global Citizen Solutions compares 46 retirement and passive-income residence programmes based on quality of life, travel freedom, access to citizenship, taxation, application procedures and costs.

Uruguay took first place after recording consistently strong results across all five categories, while Mauritius ranked second. Spain was third, followed by Costa Rica and Portugal. Latvia, Andorra, Italy, Greece and Malta completed the top 10.

The ranking found that Europe’s main advantages are its quality of life, strong passports and established routes to citizenship. Higher taxes, however, reduced the scores of several European programmes.

Quality of life carries the greatest weight in the index, followed by mobility and citizenship, taxation, application procedures and costs. The report said the priorities can vary considerably between retirees, and the gap between first and 10th place was less than four points.

Spain was the highest-ranked European destination and placed fifth globally for quality of life. Its retirement programme offers a relatively straightforward application process that can take up to eight months. However, Spain ranked last among the 46 programmes for taxation because of worldwide taxation, regional wealth taxes and the absence of a special tax regime for visa holders.

Portugal ranked second in Europe and fifth worldwide, down from first place in 2025. Its position was affected by changes to citizenship rules that increased the required residence period for most non-EU applicants from five to 10 years.

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Portugal remains one of the more affordable major European options, with an income requirement of €920 a month. It also performs strongly for mobility, although processing can take as long as two years.

Latvia ranked third in Europe, offering processing times of two to four months and relatively low costs. Andorra scored particularly well for safety and environmental standards and ranked third globally for quality of life. Its income tax is capped at 10%, with no wealth or inheritance tax, but applicants must make a local investment of €1 million.

Italy and Greece ranked first and second globally for mobility and citizenship respectively. Greece offers tax options for retirees but requires monthly income of €3,500 under its relevant programme.

Outside Europe, the Americas performed strongly for affordability and taxation, while Mauritius was Africa’s highest-ranked destination. In the Middle East, the UAE ranked 19th overall and first for preferential tax regimes.

Income requirements vary widely. They range from less than €600 a month in Nicaragua to more than €9,000 in Bahrain. Citizenship timelines also differ, with some South American countries offering naturalisation after about two to three years, while Andorra requires 20 years.

The report said 24 programmes allow naturalisation within five years, while 17 offer it within six to 10 years.

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Binance Faces EU Regulatory Scrutiny Over Continued Service to Customers

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European regulators are examining how Binance continues to serve customers in the European Union after the cryptocurrency exchange failed to obtain a licence under the bloc’s Markets in Crypto-Assets Regulation, according to a Financial Times report.

The scrutiny centres on Binance’s use of the “reverse solicitation” exemption, which allows companies based outside the EU to provide certain services to customers when those customers approach the company entirely on their own initiative.

Binance was expected to take steps to wind down its European operations after failing to secure a MiCA authorisation by the summer deadline. Under the rules, companies without the required licence were expected from July 1 to limit their activities to helping customers transfer or sell their existing crypto holdings.

The European Securities and Markets Authority and regulators in countries including France, Germany and Greece are examining Binance’s use of the exemption, the Financial Times reported, citing people familiar with the matter.

Some regulators have reportedly requested information from Binance and could consider enforcement measures, including fines, if they are not satisfied with the company’s responses. The review also extends to other cryptocurrency businesses using the same exemption.

ESMA told the Financial Times that reverse solicitation is intended to be a limited exception and should not be used to avoid MiCA requirements. The Dutch financial markets regulator AFM similarly said crypto asset service providers must meet specific requirements before relying on the exemption.

Binance’s local licences in countries including France, Spain and Poland lapsed under the new EU framework. Customers in some other EU markets are served through Binance’s Abu Dhabi entity, which has been regulated since December 2025.

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The exchange said its European operations remain compliant with applicable rules.

“In Europe, Binance remains committed to operating on a long-term, compliant basis under the EU’s Markets in Crypto-Assets Regulation. We are actively working toward becoming MiCA-authorised,” a Binance spokesperson told Euronews.

ESMA declined to comment on the specific case when contacted by Euronews. It said supervision, investigation and enforcement under MiCA are responsibilities of national authorities, while ESMA’s role includes promoting consistent supervision across EU markets through cooperation, information-sharing and guidance.

Any enforcement action against Binance would therefore need to be taken by the relevant national regulators rather than ESMA itself.

The latest scrutiny adds to Binance’s regulatory challenges in several major markets. In 2023, the company agreed to pay $4.3 billion in penalties in the United States after pleading guilty to criminal charges linked to money laundering and violations of US sanctions.

The outcome of the EU review could affect Binance’s ability to continue serving European customers while it seeks authorisation under MiCA. The exchange has said it intends to obtain the required licence and operate in the bloc on a long-term basis.

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Air France-KLM and Lufthansa Submit Final Bids for TAP Stake

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Air France-KLM and Lufthansa submitted their final bids on Wednesday for a stake in Portuguese airline TAP Air Portugal, bringing the bidding stage of the privatisation process to an end and leaving the next decision with the Portuguese government.

The two airline groups are competing to acquire an initial 44.9% stake in TAP. Their final proposals are expected to include improvements to the binding offers submitted in July, according to Parpública, Portugal’s state shareholding manager.

Parpública said it will now prepare a report assessing the changes proposed by the two bidders. The report will examine the overall merits of the final offers before being sent to the government ministers responsible for finance and air transport.

Wednesday was the deadline established by the Portuguese government for the submission of the final proposals. Infrastructure and Housing Minister Miguel Pinto Luz said earlier this week that the government would have 15 days to take a position after receiving the bids.

The proposals will be assessed on financial and strategic commitments, including investment plans, fleet development, maintenance operations, sustainable aviation fuels and compliance with labour obligations.

Air France-KLM said it had submitted a final proposal for a shareholding of up to 49.9% in TAP, signalling its continued interest in expanding its position in the Portuguese airline.

Air France-KLM Chief Executive Benjamin Smith said the group had strengthened its proposal during the final bidding period and described it as a long-term strategic plan for TAP.

The group said its proposal would place Lisbon at the centre of its operations in Southern Europe and focus on expanding connectivity, creating jobs and generating economic value in Portugal.

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Lufthansa also said its final proposal was based on its experience developing network airlines and its plans to support TAP’s growth and competitiveness.

The German airline group said it aimed to help strengthen TAP’s position as Portugal’s national carrier while supporting its future development.

The privatisation process has included the possibility of negotiations to allow bidders to improve their proposals before a preferred investor is selected. The eventual transaction will still require several formal approvals.

The sale is expected to require approval by Portugal’s Council of Ministers, as well as clearance from European competition authorities before it can be completed.

The government is seeking to sell 44.9% of TAP initially, while a further 5% of the airline’s shares is reserved for employees. Any portion of that employee allocation that is not subscribed could subsequently be acquired by the investor selected by the government.

The final bids mark the latest stage in Portugal’s effort to bring a strategic airline investor into TAP following the company’s restructuring and return to financial stability. The government will now review the competing proposals before deciding on the next stage of the process.

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