Agency Report –
The European Commission expects the EU’s economy to grow in 2025, despite global trade tensions, but at a lower rate than previously anticipated, according to a forecast released on Monday.
The gross domestic product (GDP) of the 27-member European Union is now predicted to increase by 1.1% this year and by 1.5% next year.
The GDP of the eurozone, the 20 countries which share the euro as a common currency, is forecast to grow by 0.9% in 2025 and by 1.4% in 2026.
In November, the commission had forecast EU-wide growth of 1.5% this year, with a slightly lower 1.3% for the eurozone.
“The EU economy is demonstrating resilience amid high trade tensions and a surge in global uncertainty,” said EU Economy Commissioner Valdis Dombrovskis.
“Underpinned by a robust labour market and rising wages, growth is expected to continue in 2025, albeit at a moderate pace,” he added.
Dombrovskis urged that “the EU must take decisive action to boost our competitiveness” so that the economy can continue to grow.
Looming additional US tariffs
The EU’s economic outlook is subject to changes in the United States’ tariffs policy, the commission warned.
The latest forecast is based on the assumption that Washington will not impOse additional tariffs on the bloc, on top of the universal tariffs already in place: a 10% tariff on all imports to the US, and 25% tariffs on steel and aluminium and cars.
The US has paused additional country-specific tariffs beyond this baseline for most trading partners, including the EU. This prompted Brussels to suspend its planned counter-tariffs.
The higher US tariffs could be imposed in July if no solution is reached through negotiations.
“We see these US tariffs as a factor that will have a negative impact on the EU economy and the US economy itself, and will also have negative global repercussions,” Dombrovskis said previously.
German economy set to stagnate in 2025
The EU’s three largest economies, Germany, France and Italy, are forecast to grow less than the bloc’s average growth rate in 2025 and 2026.
The commission expects German GDP to flatline this year, agreeing with previous outlooks published by the German government and the International Monetary Fund (IMF).
Once envied across Europe, Germany’s economy has suffered two consecutive years of recession as inflation, high energy prices and dropping exports weighed on businesses.
In 2026 the German economy should finally recover with expected growth of 1.1% of GDP, according to the commission.
France’s economy is forecast to grow by 0.6% in 2025 and by 1.3% in 2026. Italy’s growth is calculated at 0.7% and 0.9% respectively.
Spain’s forecast is the only one that stands out positively among the larger countries with 2.6% growth forecast his year and 2.0% next year.
By Doris Pundy
