European Commission slashes GDP forecasts on tariff impact

(Sharecast News) - The European Commission has slashed its forecasts for economic growth across the EU and eurozone over the next two years as trade tariffs hit activity more than previously thought. The Commission now expects EU GDP growth to accelerate to 1.1% in 2025 and 1.5% in 2026, according to the Spring 2025 Economic Forecast released on Monday.

In its Autumn projections, growth had expected to pick up to 1.5% and 1.8% over the next two years, respectively, after the region expanded by 1.0% in 2024.

For the eurozone, GDP growth is forecast to hold steady at 0.9% in 2025, before rising to 1.4% in 2026, compared with previous estimates of 1.3% and 1.6%, respectively.

The Commission said it was making a "considerable downgrade" compared with its previous projections, "largely due to the impact of increased tariffs and the heightened uncertainty caused by the recent abrupt changes in US trade policy and the unpredictability of the tariffs' final configuration".

Exports from the EU are now expected to grow by just 0.7% this year and 2.1% in 2026, down from previous projections for 2.2% and 3.0% growth, respectively.