Economic activity in the first three quarters of the year exceeded expectations, initially driven by an increase in exports anticipating possible dutyand managing to maintain expansion in the third quarter.
Forecasts indicate that the EU's real Gross Domestic Product (GDP) will grow by 1,4% in 2025 and 2026and will accelerate to a 1,5% in 2027The euro area will follow a similar trajectory, with projected growth of 1,3% in 2025, 1,2% in 2026 and 1,4% in 2027.
Consumption and Investment as Key Drivers
Se que el ESPERA private consumption and Your Strategic become the main drivers of this economic expansion. Despite weak global trade, a resilient labor market, improved household purchasing power, and favorable financing conditions are underpinning moderate growth.
El Recovery and Resilience Mechanism And other EU funds are playing a crucial role in mitigating the impact of budget cuts in several Member States, injecting vital support into domestic demand. Investment is projected to regain momentum, primarily focused on non-residential construction and capital expenditure on equipment.
The EU economy remains vulnerable to a challenging global environment, with trade policy uncertainty and geopolitical tensions posing downside risks.
Stabilizing Inflation and Maintaining Strong Employment
As for inflation, the euro area is expected to continue its decline, settling at a 2,1% in 2025 and around the 2% in 2027, approaching the European Central Bank's target. In the EU, headline inflation is expected to gradually decline from 2,6% in 2024 to 2,2% in 2027.
The labor market remains robust. Although the slowdown in job growth has persisted, 380,000 jobs were created in the first half of 2025. The unemployment rate is expected to continue declining, moving from 5,9% in 2025 and 2026 to 5,8% in 2027Wage growth, although slower, will remain above inflation, boosting household purchasing power.
Public Deficits and Global Risks
The forecast also points to an increase in the EU public administrations' deficit, which will rise from 3,1% of GDP in 2024 to 3,4% in 2027This increase is due, in part, to the rise in defense spending, which is expected to reach 2% of GDP in 2027. The EU's debt-to-GDP ratio will also rise from 84,5% in 2024 to 85% in 2027.
The EU economy remains vulnerable to a challenging global environment, with trade policy uncertainty and geopolitical tensions posing downside risks. Specifically, global trade barriers have reached record highs. However, recent trade agreements and the assumption that targeted tariffs imposed by the US administration will remain in place have eased some of the uncertainties that weighed on the spring projections.
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