The European Commission's Spring 2025 Economic Forecast projects moderate growth for the EU and euro area, with real GDP expected to increase by 1.1% in the EU and 0.9% in the euro area this year—matching 2024 levels. Growth is forecast to rise to 1.5% in the EU and 1.4% in the euro area in 2026.
Headline inflation in the euro area is projected to ease from 2.4% in 2024 to 2.1% in 2025 and 1.7% in 2026. In the EU, inflation is expected to fall below 2% by 2026.
While the EU economy showed stronger-than-expected growth at the end of 2024 and early 2025, the overall outlook has been downgraded due to weakening global trade and heightened trade policy uncertainty. Global growth is now projected at 3.2% for both 2025 and 2026, down from 3.6% forecast in autumn 2024, with a sharper slowdown in global trade. EU exports are expected to grow just 0.7% in 2025, with services exports remaining more resilient than goods. Export growth is expected to rebound to 2.1% in 2026.
Investment, after contracting by 1.8% in 2024, is forecast to grow by 1.5% in 2025 and 2.4% in 2026, supported by EU funding programs and a recovery in residential construction. Private consumption is expected to grow by 1.5% in 2025 and 1.6% in 2026, aided by falling inflation and a stable labour market, though elevated savings continue to dampen spending.
The labour market remains strong. After adding 1.7 million jobs in 2024, employment is projected to grow by another 2 million through 2026, bringing the EU unemployment rate down to 5.7%, a new record low. Real wages are also expected to continue recovering, with nominal wage growth moderating after a 5.3% increase in 2024.
Inflation is forecast to continue its downward trend, with euro area HICP inflation meeting the ECB's 2% target in 2025. Falling energy prices and a stronger euro are contributing to disinflation.
The EU's general government deficit is set to rise slightly from 3.2% in 2024 to 3.3% in both 2025 and 2026. The debt-to-GDP ratio is projected to edge up to 83.2% in 2025 and 84.5% in 2026, ending four years of decline.
Risks to the outlook remain skewed to the downside due to ongoing global trade tensions and climate-related disruptions. However, improved trade relations, increased defence spending, and structural reforms could support growth.
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For more information:
Balazs UJVARI
European Commission
Tel: +32 2 29 54578
Email: [email protected]
www.ec.europa.eu