Filenews 17 November 2025
European Union officials may cut their growth forecasts for 2026 next week as part of an assessment of the damage to the region's economy, a year after Donald Trump regained the White House.
The forecasts, expected to be published in Brussels today, are expected to point to the cumulative impact of trade threats and higher tariffs imposed by the US, along with the challenges posed by persistent weakness in Germany and ongoing political turmoil in France. Forecasts published in May were already pessimistic after President Trump's tariff announcement last month, which caused market turmoil on "Liberation Day," followed by a pullback as he suspended actions to pursue deals. With their own agreement with the US reached in July, Brussels officials ended up imposing 15% tariffs on most EU products. The impact for 2025 turned out to be less severe than expected. The European Commission earlier forecast a 0.9% increase in gross domestic product in the euro area and is likely to raise this estimate this time.
However, as Bloomberg points out, for 2026 hopes for a mild recovery to the 1.4% forecast in May now seem unlikely, as the European Central Bank had lowered the bar to 1% in its last round of forecasts in September.
Describing the challenges for the current quarter, Frankfurt officials said at their last meeting that "still heightened uncertainty, higher effective tariffs, a stronger euro and increased global competition are expected to hold back growth." Trade uncertainty is only one part of the story. Despite a significant increase in defense and infrastructure spending in Europe's largest economy, what could have been Germany's first substantial year of growth since the aftermath of the pandemic now looks less impressive. The government's Council of Economic Advisers has lowered its growth outlook in 2026 to below 1%.
In France, Europe's second-largest economy, political instability is a constant challenge. While growth there is proving resilient, uncertainty is dampening growth by about 0.5 percentage points, with domestic political and fiscal turmoil accounting for at least 0.2 percentage points, according to the Bank of France.
France is likely to have the region's worst deficit in the EU's public finance outlook. A bright spot is Italy, which reduced its own deficit to the bloc's 3% limit faster than expected and may even receive an upgrade from Moody's rating on Friday. "We forecast euro area GDP growth to remain below trend in the last quarter of 2025 at 0.1%. The economy may experience another period of low business investment and weak external demand as a result of increased uncertainty and fewer markets on the other side of the Atlantic," comments Bloomberg Economics.
Concern in businesses
Trump's tariff policy brings an increasingly "dark" economic landscape for the European Union, according to a survey by BusinessEurope and estimates by the European Central Bank.
Businesses warn that 2026 will take the biggest hit: eurozone growth is at risk of falling by 0.5–0.6 percentage points, while the ECB predicts an overall impact of up to 0.7 points over the period 2025–2027.
In a poll conducted by BusinessEurope, national business associations from 36 EU countries – and not only – participated. The responses reflect clear concern: companies estimate that uncertainty, increased prices and disruptions in supply chains will significantly hit the EU economy in 2026.
