Europe Intelligence Brief — Tuesday, August 25, 2026

Germany's Ifo index rose to 88.8 in August, surpassing forecasts and driven by improving current conditions and expectations. The German economy is recovering despite higher energy prices, according to the institute's president, Clemens Fuest. The economy's performance has since June exceeded expectations. Meanwhile, France has no 2026 budget, as parliament failed to agree on one in December.

The country is financing its expenditures through a special law that carries over the 2025 budget, without new taxes or spending. This includes defense spending, which President Macron had previously pledged funds for. The European bond markets are pricing a recession, despite Germany's strong economic performance. France's inability to allocate funds for defense and other priorities has become a significant challenge.