European Union officials are expected to lower the growth forecast for 2026, with an announcement scheduled for Monday in Brussels. This revision stems from a combination of factors, including the cumulative impact of trade threats and tariffs imposed by the United States, the persistent weakness of the German economy, and ongoing political instability in France.
Initial forecasts released in May were already pessimistic. Experts pointed to market disruption following announcements regarding tariffs, including those targeting Eurozone countries. While some measures were temporarily suspended to facilitate negotiations, a deal reached with the U.S. in July resulted in the acceptance of a 15% tariff on a range of European goods.
The impact on the current year has been less severe than anticipated. The European Commission previously projected a 0.9% GDP increase for the Eurozone and is likely to raise this estimate in tomorrow’s announcement. However, hopes for a modest improvement to 1.4% in 2026, as projected in May, now appear unlikely. The European Central Bank (ECB) predicted a growth rate of only 1% in its updated September forecasts.
At their recent meeting, ECB officials in Frankfurt described the challenges facing the current quarter. They stated that “high uncertainty, higher effective tariffs, a stronger Euro, and increased global competition are expected to curb growth.” The prospect of genuine post-pandemic growth in Germany, Europe’s largest economy, is also diminishing. The German Council of Economic Experts has lowered its growth forecast for 2026 to below 1%.
Political turbulence in France, the second-largest economy in Europe, presents a continued challenge. The Bank of France estimates that uncertainty is shaving nearly 0.5 percentage points off growth, with at least 0.2 points attributable to political and domestic budget issues. France is also projected to register the worst deficit in the region, according to EU forecasts for public finances.
The revised forecast, expected to be released tomorrow, will offer a clearer picture of the economic headwinds facing the EU in the coming years.
