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Present autumn forecast is based on a set of technical assumptions concerning exchange and interest rates, the governance’s policies and commodity prices, etc. Each year, the European Commission publishes two comprehensive forecasts (in spring and in autumn), covering a broad range of the EU-wide economic indicators, as well as in the candidate countries, EFTA countries and major advanced and emerging market economies. The coming Commission’s Spring Economic Forecast for 2026 will update the present projections and will be published next May.
Background
The European Commission’s Autumn 2025 Economic Forecast shows that growth in the first three quarters of 2025 outperformed expectations. While the strong performance was initially driven by a surge in exports in anticipation of tariff increases, the EU economy continued to grow in the third quarter. Looking ahead, economic activity is expected to continue expanding at a moderate pace over the forecast horizon, despite a challenging external environment.
This year’s autumn forecast projects real GDP to grow by 1.4% in the EU in 2025 and 2026, edging up to 1.5% in 2027. The euro area is expected to mirror this trend, with real GDP projected to grow by 1.3% in 2025, 1.2% in 2026, and 1.4% in 2027. Inflation in the euro area is forecast to continue its decline, falling to 2.1% in 2025, and to hover around 2% over the forecast horizon. In the EU, inflation is set to remain marginally higher, falling to 2.2% in 2027.
Global challenges’ effect
As the risks to the growth outlook are “tilted downwards”, the persistent trade policy uncertainty continues to weigh on economic activity, with tariffs and non-tariff restrictions potentially constraining EU growth more than expected. Globally, trade barriers have reached historic highs.
Any further escalation of geopolitical tensions could intensify supply shocks; at the same time, “repricing of risks” in equity markets, especially in the US technology sector, could impact investor confidence and financing conditions. Domestic political uncertainty might also weigh on confidence; finally, the increasing frequency of climate-related disasters could undermine growth.
On the upside, resolute progress on reforms and the competitiveness agenda, higher defence spending focused on EU production, and new trade agreements could bolster economic activity more than projected.
According to the Commission, the global growth – excluding the EU – is expected to slow down, from 3.7% in 2024 to 3.4% in 2025 and 2026, before edging back up to 3.5% in 2027. The real GDP growth in the US is forecast to fall to 1.8% in 2025, from 2.8% last year.
Reference to: https://ec.europa.eu/commission/presscorner/detail/da/statement_25_2703
Private consumption and investment in growth patterns
The global environment remains challenging, but a resilient labour market, improving purchasing power and favorable financing conditions are set to support moderate economic growth. In addition, the Recovery and Resilience Facility and other EU funds are cushioning the effect of fiscal consolidation in several EU states. This support underpins domestic demand, which is set to be the main driver of growth: private consumption is expected to grow steadily, supported by the above factors, but also by a gradual decline in the saving rate. Investment is set to regain momentum, mainly driven by non-residential construction and capital spending on equipment.
The EU’s highly open economy remains susceptible to ongoing global trade restrictions, but the trade deals reached between the US and its trading partners, including the EU, have alleviated some of the uncertainties that overshadowed the previous Spring Forecast.
The present forecast assumes that all country- and sector-specific tariffs implemented by the US administration will be in place throughout the forecast horizon. Globally, trade barriers have reached historic highs, and the EU now faces higher average tariffs on exports to the US than assumed in the Spring 2025 Forecast. Nevertheless, tariffs on EU exports remain lower than those applied to several other major global players. This represents a modest relative advantage for the EU economy, albeit in a context of weak global goods trade and a strong euro tempering foreign demand.
“A sustained return to stable prices is good news for European consumers who have seen their purchasing power eroded by inflation in recent years”, notes EU Commissioner.
Source: https://ec.europa.eu/commission/presscorner/detail/da/statement_25_2703
Projected stable inflation
Inflation in the euro area has been revised slightly up from the Spring Forecast: it is now expected to come down from 2.4% in 2024 to reach the ECB’s target of 2% in 2027. Trends vary across components, with decreases in services and food inflation counterbalanced by rising energy inflation. Intensifying competitive pressures from imports and the appreciation of the euro should restrain inflation in non-energy goods.
Headline inflation in the EU is projected to be marginally higher than the euro area, gradually declining from 2.6% in 2024 to 2.2% in 2027. This forecast assumes that the new EU Emissions Trading System (ETS2) will enter into force in 2027, as has been legislated.
Declining unemployment rates
The gradual slowdown of employment growth that started in 2022 continued in the first half of 2025. Employment is set to continue expanding moderately—by 0.5% in 2025 and 2026—before decelerating to 0.4% in 2027. The unemployment rate is anticipated to edge down further from 5.9% in 2025 and 2026 to 5.8% in 2027. The EU economy generated an additional 380,000 jobs in the first half of 2025.
Wage growth in the EU is set to slow but remain above inflation, modestly improving household purchasing power. In the EU, nominal wage growth is expected to decline from 5.1% in 2024 to 4.0% in 2025, 3.3% in 2026 and 3.1% in 2027.
General reference to Autumn 2025 Economic Forecast in: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_2699
National governance
EU government debt is projected to rise from 82% of GDP in 2024 to 85% in 2027; this increase is driven by two factors: persistent primary deficits and the fact that the average cost of public debt is higher than nominal GDP growth.
In the perspectives, the EU states will need to pursue prudent policies to safeguard the sustainability of public finances: i.e. this involves re-prioritizing national budgets and taking measures to enhance the effectiveness, efficiency, quality and composition of public revenue and expenditure.
Looking at the fiscal position of the EU member states, eleven countries are expected to have deficits exceeding 3% of GDP in 2025: Belgium, Germany, France, Latvia, Malta, Austria, Slovakia, Finland, Hungary, Poland and Romania; in Italy, the deficit is projected to drop to 3% of GDP this year, and decrease further in the following years.
Uncertainties in the autumn forecast
The forecast perspectives are containing both downside risks and opportunities; thus, the Commission notes:
= First the risks: uncertainty around trade policy remains high; the impact of the current tariffs and non-tariff restrictions on the European economy “might be greater than expected”. An escalation of geopolitical tensions could exacerbate negative supply shocks and undermine confidence. Repricing of risks in equity markets, especially in the US technology sector, could impact investor confidence and financing conditions. Domestically, political uncertainty might affect confidence. In light of these factors, the EU must take resolute action to unlock growth.
= Second, there are also opportunities: the global challenges “world could serve as a catalyst for reform” in the member states. At the EU-level, there is a clear roadmap to guide such reforms visualized in the EU’s Competitiveness Compass. For example, continuing to implement the measures set out in the Compass, such as simplification, completing the Single Market and boosting innovation, could bolster economic activity more than projected.
However, higher defence spending would affect the growth and production in the states; hence, the continued success in diversifying external trade could also contribute to the EU-wide growth.
Besides, these efforts must be complemented by growth-enhancing reforms by the governance in the EU member states.
Citations from: https://ec.europa.eu/commission/presscorner/detail/da/statement_25_2703