PEEIs - What Are They and How Do They Shape Your European Investments?

PEEIs - Principal Economic European Indicators provide vital signs of the euro area, the EU, and its member states, making them worth understanding.

PEEIs: The Basics

• PEEIs are high-quality economic indicators published by Eurostat - on a scheduled release calendar.

• They give a clear picture of how the EU and its countries are doing.

The Key Economic and Financial Indicators

The big three are: inflation, GDP and interest rates.

• Inflation indicates the change of the price level of consumer goods and services over time. Eurostat uses the HICP (Harmonised Index of Consumer Prices), to measure inflation across EU countries.
  Last week, they reported that the euro area’s annual inflation rate had hit 1.9% in May 2025, down from 2.2% in April (and 2.6% a year ago) and that the European Union’s annual inflation was 2.2% in May 2025, down from 2.4% in April and 2.7% in 2024. Good news for us, but what does it mean for the ECB?

• GDP measures the total economic activity in a region. This includes household expenditures, exports and imports, government consumption, etc… Eurostat reported that “in the first quarter of 2025, GDP increased by 0.6% both in the euro area and in the EU” compared to last quarter. Slow but steady growth.

• Interest rates are set by the ECB, and they influence borrowing costs. As of June 2025, the main refinancing fixed interest rate is 2.15%. Lower rates tend to boost spending and investment.

The ECB’s Inflation Goal

The ECB is the main economic and monetary policymaking body in the European Union. Therefore, all this data informs their decision-making. Their main objective is for inflation to remain “low, stable and predictable”, with a 2% target.

Why 2%? They consider that it provides a safety margin against deflation - if inflation drops too low, cutting interest rates might not be enough to reignite the economy, unlike rising interest rates, lowering them has a limit.

In May 2025, HICP inflation in the euro area was 1.9%. Will the ECB consider lowering interest rates even further?

How This Shapes Your Investment Strategy

Good sentiment - like GDP growth, cooling inflation, low interest rates - often lifts the markets.

• ETFs - the iShares MSCI Eurozone ETF and the SPDR S&P Euro Dividend Aristocrats UCITS ETF (Dist) are good options for broad exposure in Europe.

• Stocks - Dividend stocks like Iberdrola, with a great performance, for steady income as interest rates fall, or ASML for tech growth.

I will personally keep an eye on the next Eurostat’s next release of Euro Indicators on the 17th of July.

See you next week!
- MrInvest