Finance in brief: Water investment, banking battles and Europe’s changing economy

From new investment in Mediterranean water infrastructure to banking consolidation, government spending and changing payment habits, businesses and policymakers across Europe are facing a busy economic landscape. Here are some of the latest finance and business developments from across the continent and beyond.

Mediterranean water investment

Meditteranean countries have now agreed to new measures to attract investment into water infrastructure as climate pressures and water scarcity intensify across the region.

Representatives from 43 Union for the Mediterranean states endorsed a programme for cooperation through 2030, alongside the new Rome Initiative on Water.

The initiative aims to turn national water objectives into practical projects that are capable of attracting finance, particularly in Southern and Eastern Mediterranean countries.

New recommendations cover, amongst other things, national financing strategies, tariffs, climate finance and the role of public development banks and private investors in improving water resilience.

Italy’s banking battle

Italy’s banking sector is undergoing a major consolidation battle as its largest lenders compete for scale and market share.

Intesa Sanpaolo launched a €30.6 billion bid for Monte dei Paschi di Siena, while MPS responded with plans to acquire Banco BPM and Banca Generali in deals worth around €34 billion.

The moves could significantly reshape Italy’s banking landscape, affecting branch networks, competition and access to credit. Regulators are also examining the potential consequences of greater market concentration.

EU budget ultimatum

Germany and five other EU countries are demanding major spending cuts before agreeing to the bloc’s next seven-year budget.

Leaders from Germany, the Netherlands, Sweden, Denmark, Austria and Finland want the budget reduced by hundreds of billions of euros and spending shifted towards defence and innovative businesses.

The dispute comes as the EU seeks to strengthen European industries facing competition from China and the US while continuing support for agriculture and poorer regions.

The six countries argue that changing economic and security pressures require the EU to fundamentally rethink its spending priorities.

Electronic payment shift

Europe’s shift from cash to electronic payments is increasing the importance of modern point-of-sale technology.

Integrated systems connect tills with card terminals, stock management and transaction data, helping businesses process payments faster and introduce options such as contactless cards and digital wallets.

For retailers and hospitality businesses, upgrading payment infrastructure is becoming increasingly important.

Canada’s European connection

Canada’s pursuit of closer ties with the European Union could bring new investment opportunities in clean energy and critical minerals, while increasing pressure on Canadian businesses to meet tougher environmental standards.

The EU’s carbon border mechanism means exporters without comparable domestic carbon pricing could face additional costs. Meanwhile, the European Investment Bank is exploring greater financing of Canadian projects, particularly critical minerals.

Closer cooperation could also create opportunities for Canadian low-carbon industries.

French debt hits record level

France’s public debt has reached a record 119 per cent of GDP, increasing pressure on the country’s finances.

The latest figures highlight the challenge facing France as it seeks to reduce its budget deficit, control public spending and meet European Union fiscal requirements while limiting the impact on future economic growth.

Europe’s drinking data

Almost five per cent of Europeans aged 16 and over consumed alcohol daily in 2025, according to Eurostat figures.

Weekly consumption stood at 19.2 per cent, while 21.8 per cent drank monthly. Daily drinking increased with age, reaching 8.9 per cent among people aged 65 and over.

Debate over frozen Russian assets

Pressure is growing within Europe to find a way of using more than €200 billion in frozen Russian assets to support Ukraine.

Sweden reopened the debate in August, but the European Commission is waiting for clearer direction from member states. Ukraine faces a reported $27 billion budget shortfall in 2026.

Proposals include shifting responsibility for the assets away from Belgium-based Euroclear, allowing legal and financial risks to be shared across the EU.

Pressure on diesel supplies

Europe faces greater pressure than Asia from tightening global diesel supplies as Middle East disruption and Russian export restrictions affect markets.

European cargoes are becoming more expensive while Asian refiners remain better supplied. Producers in India, China and Japan could provide additional exports to Europe if diesel shortages intensify further.

Inflation in Spain has climbed to its highest level since February 2023, with rising fuel costs helping to push the annual rate to 4.9 per cent. Prices have now increased for three consecutive months, adding renewed pressure to household finances as consumers face higher everyday costs.

Inflation reaches 4.9%

Inflation in Spain has risen to 4.9 per cent, its highest level since February 2023, as higher fuel costs put renewed pressure on household finances.

The latest Consumer Price Index (CPI) data from the National Institute of Statistics (INE) shows the annual rate increased by six tenths in September.

Inflation has now risen for three consecutive months and is above 4 per cent for the second time since April 2023.

Fuel costs drive September increase

Fuel and lubricants for private vehicles were a major factor behind September’s increase. The Ministry of Economy attributed this partly to higher energy costs linked to the conflict in Iran, as well as comparison with September 2025, when fuel prices fell.

Tourist packages also contributed, with prices decreasing less than they did during the same month last year.

Core inflation rises to 3.1%

Core inflation, which excludes unprocessed food and energy products, increased by two tenths to 3.1 per cent. This remains 1.8 percentage points below the headline inflation rate.

On a monthly basis, consumer prices increased by 0.3 per cent from August, marking the eighth consecutive monthly rise.

The harmonised inflation rate, used for comparisons across the European Union, reached 5 per cent year-on-year.

The figures remain provisional, with final September CPI data expected on October 14.