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EU will increase 1.2 percent in 2026. This is down on 2025’s 1.4
Modest but continuing growth forecast for EU and percent, but up from the one percent the Bank projected in
Eurozone September.
EU and Eurozone economic growth in 2026 will be modest, “This upgrade reflects a loosening fiscal stance, particularly
either level with or slightly down on 2025, according to latest from Germany with projected investment of €127 billion over
forecasts from analysts, banks and the EU Directorate of 2026, as well as strong private consumption and private sector

Economics and Finance (ECFIN). But stronger performance investment, notably in artificial intelligence,” says OMFIF, adding
is expected in 2027. that another factor in the ECB’s outlook revision is EU-funded
According to its report in December 2025, international investment in southern European nations.
professional services provider KPMG, Eurozone GDP will The downside risks include continued geopolitical uncertainty,
grow by 1.1 percent in 2026, following last year’s 1.3 percent. notably due to the war in Ukraine, plus a resurgence in
“Robust labour markets and real wage growth is supporting international trade tensions.
household incomes,” it says. “However, subdued consumer The Autumn Forecast from ECFIN, published November
confidence, particularly in countries such as France and 17, says that EU economic growth ‘exceeded expectations’
Germany, is driving elevated savings intentions, tempering in 2025 at 1.4 percent and is forecast to remain at this level

growth in spending.” in 2026, before rising to 1.7 percent in 2027.
But it says there are some encouraging signs for improvement It estimates 2025 Eurozone growth at 1.3 percent and
with increased investment in digital infrastructure and the predicts this to slip to 1.2 percent in 2026, then increase to
green energy transition. It also expects more expansionary 1.4 percent in 2027.
measures in 2027 including increased spending on defence Overall EU goods export growth is predicted to slow
and infrastructure. down in 2026 due to the ‘high global tariffs’, but a rebound
The independent Official Monetary and Financial Institutions is expected in 2027. At the same time, exports of services

Forum (OMFIF) says there are reasons for optimism for the are projected to continue growing robustly throughout the
Euro area in 2026, but with some downside risks. forecast period.
It points to the fact that the European Central Bank cut EU goods imports are expected to follow a similar pattern
its deposit facilities rate in its first four meetings in 2025 and to goods exports but ‘grow at a more dynamic pace’.
that inflation is near its two percent target. “This high import growth is expected to be driven by trade
It also cites the fact that the ECB predicts Euro area GDP diversion caused by US tariffs on imports from third countries,”
says the ECFIN economic forecast. “China’s relatively high
coastalfljax.com share in US goods imports and the high average tariffs it
faces in the US mean that a large amount of its exports could

be redirected to other markets, including the EU,” it states.

EUDR simplification
With the publication on 23 of December of an amending
regulation in the Official Journal of the EU, implementation
of the EU Deforestation Regulation (EUDR) is pushed back
a further year.