Europe bulletin: inflation nudges higher, Nestlé ousts CEO, UK debt warning

A turbulent day across Europe brought fresh inflation data from the euro area, another leadership crisis at Nestlé, a sharp warning from UK bond markets, and a broad sell-off across the continent’s equities.

Here is a look at the biggest news events that made headlines across the continent.

Euro-area inflation edges up, ECB pause likely

Eurostat figures released Tuesday showed euro-area inflation climbing to 2.1% in August, up slightly from 2% in July.

The modest uptick reinforced expectations that the European Central Bank will keep interest rates unchanged when policymakers meet on September 11.

Core inflation, which strips out volatile food and energy prices, held steady at 2.3%, while services inflation eased to 3.1%.

The numbers suggest headline inflation remains only marginally above the ECB’s 2% target, giving officials cover to extend their current pause on rate changes.

Still, uncertainty lingers over the timing of future cuts, with investors divided over whether stubborn price pressures will fade quickly enough.

Nestlé ousts chief executive after internal probe

Swiss food and beverage giant Nestlé was plunged into another leadership crisis after dismissing Chief Executive Laurent Freixe following an internal probe into an undisclosed relationship with a subordinate.

The affair was found to have breached the company’s code of business conduct, prompting his immediate removal late on Monday.

Shares fell nearly 3% at the open before recovering some ground, trading 1.5% lower by mid-morning.

The abrupt ouster marks Nestlé’s second chief executive change in just over a year, fuelling concerns over stability at the Vevey-based group.

Freixe, appointed only last year, oversaw a further 17% decline in Nestlé’s share price, compounding a slump that has wiped nearly a third of the company’s market value over the past five years.

Philipp Navratil, head of the Nespresso business and a Nestlé veteran, has been named as his replacement.

UK bond market delivers painful warning

In Britain, borrowing costs surged to levels not seen in decades, intensifying fiscal headaches for Prime Minister Keir Starmer’s government.

Yields on 30-year gilts jumped to 5.67% — the highest since 1998 — while 10-year yields hit 4.78%.

The pound weakened in response, signalling growing unease among investors about the UK’s fiscal position.

The spike in yields is part of a broader global sell-off but carries particular significance for Chancellor of the Exchequer Rachel Reeves, who now faces mounting pressure to stabilise public finances ahead of the autumn budget.

The government’s credibility has already been dented by a recent U-turn on welfare reforms, underscoring political fragility at a sensitive moment.

European stocks suffer steepest losses in a month

The bond market turmoil spilt into equities, with European shares posting their worst day since early August.

The Stoxx 600 closed down 1.47%, Germany’s DAX slid 2.2%, and travel and technology stocks were among the hardest hit, falling 3% and 2.7% respectively.

The rout reflected a global rise in yields, exacerbated by a US court ruling that most of Donald Trump’s tariffs were illegal, rattling Treasury markets.

In France, 30-year yields climbed to their highest since 2009, with investors watching next week’s no-confidence vote that could topple the government over budget disputes.