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Europe’s economy is trying to catch its breath. Exports are slumping, inflation is lingering, and policymakers are now counting on people’s paychecks and steady jobs to keep things from stalling completely.
With global demand falling and factories struggling, the eurozone is turning inward, hoping domestic spending can make up for what’s missing abroad. Rising real incomes and historically high employment have helped soften the blow, but inflation remains stubborn at around 2.4%, mostly driven by the services sector rather than manufacturing.
That’s the polite way of saying that people are still spending on travel, restaurants, and leisure, while factories, facing an expensive euro and export tariffs, are fighting to stay competitive.
The European Central Bank (ECB) hasn’t hit the panic button yet, but it’s keeping both eyes on the numbers and on what’s happening in the U.S., where economic signals are just as mixed.
The ATA that fizzled out
Meanwhile, closer to home, Cyprus’ own “firework” of an idea, the ATA for all (Automatic Cost-of-Living Allowance), appears to have burned out just as quickly as it was lit.
Touted as a way to make life fairer by adjusting wages to match inflation, the plan now seems destined to cover only minimum-wage earners, rather than the broader workforce it originally targeted.
Employers have pushed back, calling for compensations if the scheme expands, and without a comprehensive deal in sight, the dream of an “ATA for everyone” looks more like wishful thinking than policy.
For many workers, the debate has become symbolic, a reminder that while wages may rise on paper, the cost of living always seems to rise faster.
Celebrating upgrades, ignoring cracks
Finance Minister Makis Keravnos recently reminded the public that Cyprus, like the rest of Europe, faces a wave of challenges, from geopolitical tensions and energy uncertainty to persistent inflation.
Still, the government prefers to highlight credit rating upgrades and positive IMF forecasts, painting a picture of resilience.
But analysts warn that there’s too little talk about Cyprus’ internal economic weaknesses, issues like structural inefficiency, overreliance on construction and services, and sluggish reform in key sectors.
“These aren’t problems that make international headlines,” one local economist noted, “but they’re the ones that quietly chip away at long-term growth.”
Energy adventures, round 12
Then there’s the never-ending energy saga, a mix of ambition and confusion that would make for a great miniseries.
Cyprus has spent years chasing the dream of natural gas imports through a floating regasification unit and an onshore terminal. But now, a private company argues that a submarine pipeline would actually be cheaper and more efficient, claiming that the current approach won’t significantly reduce energy costs.
Officials haven’t ruled it out, but the situation highlights a pattern familiar to anyone following Cyprus’ energy policy: big plans, shifting strategies, and a lot of waiting.
After all, as the writer quipped, “the seabed doesn’t scare us,” not when we’re already planning a submarine electricity cable linking Cyprus, Greece, and Israel.
Oil prices slide, for now
Globally, an oversupply of oil is helping keep inflation in check, at least temporarily. OPEC has prioritized protecting market share over limiting production, leading to a rare surplus expected to grow even more next year.
Cheaper oil is good news for consumers, but it’s also a warning sign: slowing demand often signals weaker global growth. Add to that former U.S. President Donald Trump’s unpredictable trade policies, or as one analyst put it, “economic acrobatics,” and the risk of a broader global slowdown remains on the table.
The bottom line
For Cyprus and the rest of Europe, the story is the same: a balancing act between optimism and reality.
Yes, employment is strong and inflation is easing, but exports are down, growth is thin, and energy policy remains tangled. The EU may be avoiding crisis, for now, but as one Cypriot economist recently said, “You can’t build resilience on slogans.”
