Moderate Growth and European Resilience: Brussels' Autumn Forecasts
The European Commission has just released its autumn economic forecasts, presenting an optimistic outlook for growth in the Eurozone and the European Union in 2025. Despite a tense international environment and persistent trade barriers, the projections show a dynamic exceeding the expectations outlined in the spring, while highlighting structural challenges for public finances.
GDP Growth Exceeds Expectations Driven by Domestic Demand
For 2025, Brussels forecasts a GDP growth of 1.4% for the European Union and 1.3% for the eurozone, marking an upward revision from the estimates in May. This moderate pace is expected to continue in 2026 (1.4%) and accelerate to 1.5% in 2027 at the European level, with a slightly weaker momentum for the eurozone.
This rebound is surprising, given the continuation of US tariffs on European goods, confirmed at 15% in the July agreement between Washington and Brussels. The Commission highlights the strong resurgence in domestic demand as a key factor in sustaining growth, despite the weakening of international trade and the stability of the euro against major currencies. According to Valdis Dombrovskis, Commissioner for the Economy, the Union must rely more on its « national levers » to support activity as trade barriers remain at unprecedented levels.
Controlled inflation and robust employment, but wages slightly slowing
Inflation projections for the eurozone indicate a relaxation: 2.1% in 2025, then a stabilization around the ECB's 2% target. The European Central Bank has maintained its key interest rate at 2%, with no cuts expected in the short term. In the labor market, employment is expected to continue growing at 0.5% in 2025 and 2026, before slowing to 0.4% in 2027. Meanwhile, wages keep rising faster than inflation, which should slightly strengthen household purchasing power. This trend, although encouraging, comes with increased caution due to political and trade uncertainties, particularly for France, whose growth for 2025 has been revised up to 0.7% by Brussels and is estimated at 1.1% in 2027.
Public Finances Under Strain and Debt Outlook
Despite the renewed activity, the issue of public finances remains unresolved. The European Commission forecasts an increase in the public deficit within the Union, rising from 3.1% of GDP in 2024 to 3.4% in 2027. This shift is mainly attributed to the increased military spending and the rising interest charges on debt. The debt-to-GDP ratio will continue its gradual ascent, reaching 85% in the EU and 91% in the eurozone by 2027. Four countries—Belgium, Greece, Italy, and France—are expected to have debt levels exceeding 100%, with France even reaching 120% of GDP. According to the Commission's analysis, fiscal consolidation will be essential, especially with the implementation of the carbon market (ETS2), which will alter the balance for households and businesses starting in 2027, compelling states to adjust their fiscal and environmental strategies.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
