PRODUCTIVITY: The backdrop stayed loud yet the bar for change didn't move

Since February, a war in the Middle East and the disruption to the Strait of Hormuz have driven what the IEA called the largest oil supply disruption in the market's history.

The ECB felt it directly. Rather than cutting rates as expected, the Governing Council has now raised rates twice – one in June, and again in September with the vote being unanimous. The September staff projections put euro area growth at 0.9% for 2026 and 1.4% for 2027, with headline inflation revised. Headline inflation averages 3.0% this year, with a peak of 3.6 expected in the fourth quarter. The ECB still see risks to growth tilted down and risk to inflation tilted up.

The ESAs' Autumn 2026 risk update, published on 23^rd September, puts reliance on non-EU ICT providers at the front. It also points to private credit, which is growing fast with thing transparency. The spring update flagged geopolitical tension and private-finance vulnerabilities. The autumn one reads like confirmation.

None of this changes what firms need to do. It just raises the cost of getting it wrong.

Firms still need productivity gains, and the easy cuts have mostly been made. What's left is harder: reducing friction without weakening controls, compressing cycle times without adding operational risk, and doing all of it while energy costs and rate expectations move against them.

Automation earns its place when it removes human middleware, tightens evidence, improves straight-through handling and clears the drag nobody budgeted for. Blunt cost take-out is a different pitch, and a weaker one in a volatile year.

There is a difference between cheaper and better. Right now, better is what tends to stick.