Investing.com — The economic outlook for Europe in 2025, as assessed by analysts at BofA Securities, underscores a complex mix of challenges and opportunities, reflecting a landscape marked by fiscal policy shifts, trade uncertainties, and inflationary dynamics.
Key insights from their latest research suggest a year defined by divergent trajectories across the Euro area, the UK, and individual member states.
In the Eurozone, growth is projected to hover around 0.9% in 2025, underpinned by mild cyclical recovery driven by consumption.
This recovery benefits from the ongoing disinflation process, which supports real wage gains, albeit only until the latter half of the year.
However, business investment is expected to remain subdued due to heightened trade uncertainties and constrained medium-term demand.
The European Central Bank is anticipated to continue its rate-cutting cycle, with the deposit rate potentially falling to 1.5% by September 2025, as the ECB grapples with weak economic momentum and persistent inflation undershooting its targets.
Inflation in the Euro area is forecasted at 1.6% in 2025, reflecting the impact of lower energy prices and a subdued demand environment.
Analysts believe this will further manifest as a chronic output gap and an overly restrictive policy mix.
Despite these challenges, the possibility of a pan-European fiscal policy overhaul or a German-led rethink could offer upside potential, though these remain uncertain given the…
