Euro-zone GDP rose strongly in Q1 but the economy will struggle in the rest of this year as tariff front-running ends and higher US tariffs start to weigh more heavily on activity. Increased defence and infrastructure spending will then support GDP growth in 2026 and 2027, with the boost mostly concentrated in Germany. The ECB’s easing cycle is drawing to a close, but inflation below 2% and growth set to weaken in the near term we see scope for one more rate cut in September, taking the deposit rate to 1.75%.
Elsewhere, we think that the SNB will cut rates back into negative territory at its June meeting. The Riksbank may make one final rate cut this year, whereas Norges Bank is likely to start its easing cycle later this year.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.