The Commissions Spring 2025 Economic Forecast anticipates a 1.1% GDP growth in the EU and 0.9% in the euro area for 2025, similar to 2024. Growth is expected to rise to 1.5% in the EU and 1.4% in the euro area in 2026.
A resilient economy despite challenges
In late 2024, the EU economy showed unexpected strength with a 0.4% growth, driven by domestic demand. This momentum continued in early 2025 with a 0.3% GDP increase.
The forecast has been revised downwards due to global trade uncertainties.
Assumptions regarding trade tariffs, particularly between the US and EU, indicate potential impacts on trade dynamics. Global growth outside the EU is now expected at 3.2% for 2025 and 2026, down from previous forecasts.
EU exports are expected to grow modestly by 0.7% this year, improving to 2.1% in 2026.
Domestic demand faces uncertainty, affecting investment recovery. Investment is projected to rise by 1.5% in 2025 and 2.4% in 2026, supported by infrastructure and R&D investments.
Private consumption is expected to grow by 1.5% in 2025 and 1.6% in 2026, aided by a resilient labour market and easing inflation.
Labour market remains strong
In 2024, employment expanded with 1.7 million new jobs. Despite moderate growth, employment is expected to rise by 2 million jobs by 2026, with unemployment dropping to 5.7%.
Wage growth will slow, but real wages will continue to improve, recovering purchasing power.
Inflation trends downward
Inflation is set to decrease, meeting the ECBs 2% target in 2025 and dropping further in 2026.
Energy prices and a stronger euro contribute to disinflationary pressures.
Deficits to rise slightly
The EUs deficit is expected to increase to 3.3% in 2025 and remain stable through 2026.
The debt-to-GDP ratio is projected to rise slightly, reflecting a shift after years of reduction.
Global tensions and uncertainties
Global trade fragmentation poses risks to growth and inflation. Climate-related risks also persist.
Positive developments in EU-US trade or new agreements could boost growth.
Background
This forecast considers data up to April 2025, assuming no policy changes unless specified.
The European Commission issues forecasts biannually, covering various economic indicators.
The Autumn 2025 forecast will update these projections in November 2025.
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