Eurozone outlook 2025-26: A clearer path for Eurozone growth but tariffs will still bite

The Eurozone economy has held up against geopolitical challenges but faces lacklustre growth in the near term, with global demand and uncertainty weighing on exports and investment. GDP growth is forecast at 0.8% in 2026, below consensus.

A new US trade agreement has reduced major risks and should support moderate activity next year, though consumer caution and low sentiment mean households will likely save rather than spend.

Fiscal and monetary policy are offering little support. Most governments are pursuing modest consolidations, while the ECB’s rate-cut cycle is nearly at an end.

Inflation is expected to fall below 2% in 2026, with easing core inflation helped by slower wage growth and a strong euro keeping goods prices in check.

BONUS: Watch our recent Eurozone webinar here for more insights.