European Economic Forecast Autumn 2025 (European Commission)

Summary

• Real GDP is projected to grow by 1.4% in the EU in 2025 and 2026, edging up to 1.5% in 2027.p.15
• The euro area is expected to grow by 1.3% in 2025, 1.2% in 2026 and 1.4% in 2027.p.15
• Euro area inflation is forecast to fall to 2.1% in 2025 and then hover around 2% over the next two years.p.16
• The headline US-EU tariff rate is 15%, and US tariffs are at their highest levels in nearly a century.p.16
• Investment growth is expected to reach 2.6% in 2026 after 2.0% in 2025, driven by equipment investment and RRF funds.p.18
• The EU unemployment rate is anticipated to edge down from 5.9% in 2025 and 2026 to 5.8% in 2027, while wage growth slows from 4.0% in 2025 to 3.3% in 2026.p.18
• The EU debt-to-GDP ratio is projected to rise from 82% in 2024 to 85% in 2027, and from 88% to 91% in the euro area.p.19

Key insights

1. Potential growth is set to go down from 1.5% in 2024 to 1.3% in 2027 in the EU as the working age population slows.p.15
2. The EU economy generated jobs for an additional 380 000 people in the first half of 2025.p.18
3. Employment is set to expand by 0.5% in 2025 and 2026 before decelerating to 0.4% in 2027.p.18
4. Wage growth is expected to decelerate to 3.1% in 2027.p.18
5. Inflation in the EU is set to fall to 2.2% in 2027.p.16
6. Investment growth is set to slow slightly to 2.1% in 2027.p.18
7. By 2027, four Member States are set to have debt ratios above 100% of GDP.p.19