Top 3 Economic Stories of the Week

Eurozone Inflation Hits ECB Target

Weaker energy prices drove eurozone's headline inflation down to 2.0% in December - the first time the ECB's target has been met in months. This comes after core inflation eased slightly. ECB strategists are largely observing the statistic as a convincer for the case that their monetary policy should remain unchanged. After the statistic was released, German bund yields declined slightly while the euro remained fairly stable. This is super important to dive into and watch over the coming weeks as achieving the inflation target removes a key hurdle for the ECB. However, we can say it is likely for the ECB to remain on pause until data consistently shows further disinflation.

WEF Survey Shows Global Business Confidence Weakening

This week a survey was released by the World Economic Forum revealing that 42% of business leaders found that it became harder to do business during 2025 - a statistic that has risen since 2024. Which factors dragged global economic cooperation? It was the growing barriers in trade alongside talent mobility and geopolitical fragmentation that executives cited as issues. A fair amount of the survey pointed towards the ongoing effects of 2025's tariff shifts - as many saw uncertainty in their supply chains and investment plans amidst the volatility of markets. Despite such headwinds, investment in renewable energy grew by almost 10%, displaying sectoral resilience throughout the year. The survey exemplifies the effect that geopolitical and market uncertainty has on business confidence and investment, both of which were restrained in 2025.

Inflation Cools in Argentina

A Reuters projection this week displayed that Argentina's annual inflation rate is estimated to have fallen to about 31% in 2025, the lowest in seven years. Notably, prices for goods like apparel and home appliances have stabilised, but service costs such as rent and utilities are still on the rise. Some analysts have projected that inflation could fall again in 2026. This matters because Argentinas progress - if sustained - exemplifies how tight macro policy and exchange rate stability can have a positive effect on inflation, displaying potential policies for other economies grappling with high inflation rates.

Policy Pulse: A global outlook

The ECB are likely to hold on their policy after inflation reached their 2.0% target all the while policymakers continue to emphasise the caution around services inflation. Not a lot was carried out or groundbreaking per se this week on the central bank policy front, however there are a couple of things the team at Policy and Price would like to take a look at on a global scale. Across multiple economies the policymakers within such central institutions are prioritising financial stability and containing risk over any sort of short term growth acceleration. Furthermore an interesting (and complex multifaceted) dynamic is that between monetary and fiscal policy, as fiscal policy has begun actively shaping monetary decisions. In terms of markets, this could foreshadow fewer policy surprises (such as this week), but longer periods of conditions that deliberately look to slow down economic activity as to keep a tight control over inflation.

Market Spotlight: The Gig Economy

While I'm aware it's more of a subsection of the labour market rather than an industry per se (hence the adjusted title), a cooling but not collapsing labour market this week turned attention towards the gig economy. With full time hiring slowing, it seems that many workers have looked towards the gig economy. This shows positive signs as instead of simply exiting the labour market entirely, those looking for work are continuing to persevere during uncertain times - using the gig economy as a catalyst to do so. However, the platforms that fuel this side of the labour market reported greater price sensitivity from consumers this week - which resulted in tighter margins and increased competition for not only the platforms, but also among workers for gigs. Many economists have suggested that the gig economy is merely acting as a buffer - absorbing labour that would otherwise show up as unemployment. This does act as a good explanation for why unemployment rates are remaining low even as hiring momentum slows. Meanwhile, we can interpret income insecurity emerging out of the situation we see alongside reduced consumer confidence as flexible work often leads to hours and pay fluctuating week to week. As the gig economy becomes a more permanent feature of the labour market, policymakers begin to pay closer attention to it. Questions have already been raised around worker protections and minimum earnings guarantees - both of which are largely unresolved. For investors and economists alike, the gig economy (and the growth of it) provides a real time indicator of flexibility in the labour market alongside consumer demand.