The eurozone’s growth prospects for 2025 are clouded by political instability in key economies like France and Germany, which could weigh on consumer spending and business investment.
France is bracing for a turbulent year due to ongoing political debates over the 2025 budget, leading to uncertainty in consumer spending and investment. This, in turn, will force the government to tighten its fiscal belt, stifling economic growth.
In contrast, Germany is expected to implement fiscal stimulus after elections in February, aiming to modernize its economy and close the investment gap of the last decade. Structural reforms and investments are needed to break the current vicious circle, leading to a gradual turnaround in 2025.
Italy’s private consumption is seen as a ray of light, with employment growth taking a breather and real wages increasing towards the 2% area. However, the investment outlook remains uncertain due to the ‘super-bonus’ overhang and potential US tariffs on Italian products.
Spain is expected to continue its economic growth momentum in 2025, driven by private consumption and investment. The onset of monetary easing will boost household spending and private investment, particularly in the construction sector.
The eurozone’s sluggish economy will see Spain at the forefront, with a gradual recovery anticipated for 2025.
Source: https://think.ing.com/articles/macro-outlook-eurozone-big-4-politics-is-a-drag