04.12.2025

Modest Growth in Euro Area

Association of European Economic Research Institutes Publishes General Report

The AIECE General Report (Autumn 2025), whose core purpose is to assess the forecasts and evaluations of AIECE institutes across Europe, highlights a European economy that grows moderately but is exposed to geopolitical pressures, structural weaknesses, and shifting global conditions.

On average, the institutes anticipate that Euro area growth will remain modest, reaching 1.1 percent in 2025 and 1.0 percent in 2026. These expectations are slightly more cautious than those in the European Commission's Autumn 2025 Economic Forecast (1.3 and 1.2 percent) and the IMF's Autumn 2025 World Economic Outlook (1.2 and 1.0 percent). The core economies are no longer the primary drivers of European growth. Instead, countries such as Spain, Ireland, Croatia, Denmark, Norway, and Greece are outperforming, while Germany, Italy, Austria, and France continue to trail behind.

Inflation is projected to moderate to 2.1 percent in 2025 and 1.8 percent in 2026, though external shocks remain the dominant risk. Labour markets are cooling, with persistent divergence across countries: Spain maintains double-digit unemployment, Germany faces industrial headwinds, and several Nordic countries report shortages of skilled labour.