EU economy remains relatively resilient overall, but is held back by significant competitiveness challenges
Ahead of this week’s Macroeconomic Dialogue, BusinessEurope has published its new Economic Outlook.
After a modest expansion of 0.9% in 2024, it forecasts that growth will stabilise at approximately 1% in 2025 in line with the Spring edition of the Economic Outlook and then slightly increase to 1.3% in 2026.
To ensure that the EU economy reaches its full potential, the EU must urgently intensify its efforts to fix its competitiveness flaws. Both the EU and Member States must act swiftly to implement measures and reforms that lower energy prices, significantly reduce regulatory burdens, simplify administrative procedures, promote a simpler and less distortive tax system, and diversify its exports and import markets.
Barriers within the Single Market, which the IMF estimate to be equivalent to tariffs of 44% for goods and 110% for services, equally have to be removed to encourage investment and healthy competition between businesses across Member States.
Moreover, the Economic Outlook highlights the fact that the EU lacks the necessary investment in key strategic areas. This is particularly noticeable in research and development, where the EU spends significantly less than its competitors. To close this investment gap, the Savings and Investment Union must be completed. The upcoming Multiannual Financial Framework – the EU’s budget – will also be crucial to closing the EU’s investment gap.”
Other notable findings from the Outlook include:
- Investment growth has been revised downwards and is expected to be at only 0.6% in 2025, before rebounding to 2.2% in 2026.
- Inflation and unemployment are easing, with headline inflation at 2.1% and unemployment forecast to remain at 4.8% in both 2025 and 2026 – which is lower than previously projected.
To read BusinessEurope’s full Economic Outlook in full, click here.
