Eurozone growth beats 2025 forecasts despite Trump woes

Eurozone growth beat expectations to reach 1.5 percent last year, official data showed Friday, picking up pace for a second year running in spite of a bruising trade standoff with the United States.

Europe is working to close the gap with economic rivals China and the United States, and spiking trade tensions with President Donald Trump's administration over trade have created added impetus to bolster its competitivity.

Last year's uptick in the single-currency area's economy builds on the modest 0.9 percent expansion recorded in 2024, after an anaemic 0.4 percent a year earlier.


Analysts at Bloomberg had forecast eurozone growth to be 1.4 percent, while the European Commission itself predicted 1.3 percent.

Quarter-on-quarter growth for the area reached 0.3 percent in the last three months of 2025, according to statistics agency Eurostat.

"The eurozone economy ended 2025 with decent economic growth despite significant uncertainty and economic tension," wrote ING chief economist Bert Colijn.

"Accelerating growth in Germany, Spain and Italy, to a lesser extent, made up for slow growth in France," he said.

Data released Friday in Germany showed its economy grew faster than expected at the end of 2025, expanding 0.2 percent over the year, suggesting a recovery is gathering pace in Europe's struggling industrial powerhouse.

But annual growth in the eurozone's second-biggest economy France slowed to 0.9 percent, national data showed, impacted by a disappointing fourth quarter as the government wrestled with passing a new budget.

Spain's economy meanwhile grew at more than twice the eurozone average last year, expanding 2.8 percent, fuelled by strong consumer demand, rising exports and robust tourism.

The eurozone's fourth-largest economy has outperformed its peers since 2021, supported by low energy costs, domestic consumption and a tourism boom since the end of the Covid pandemic.

- 'Upbeat' -

ING's Colijn said the eurozone-wide outlook for 2026 was "becoming more upbeat", with industrial production expected to benefit from defence investments and German infrastructure spending in particular.

He predicted "accelerated growth over the coming quarters," noting that even a "modest" pickup would be something to celebrate given the "significant turmoil" in international relations.

But he warned other factors were set to keep dragging on growth, from the uncertain global environment to a loss of competitiveness across the eurozone.

"These broader structural concerns are not being addressed quickly enough at the moment, which curbs longer-term prospects," he said.

EU leaders will hold talks on competitiveness next month in Belgium as the bloc seeks to revive its economy and foster innovation.

Across the broader 27-country European Union, the economy expanded by 1.6 percent last year, the data showed.