Mario Draghi, the former president of the European Central Bank, had warned Europe of a "slow agony" if it did nothing to take control of its economic destiny. But although Donald Trump's return to the White House has sped up their consideration of the need to invest, the 27 member states have yet to take significant action to escape this bleak forecast. And the latest forecasts from the European Commission, published on Monday, May 19 show that growth remains desperately stagnant in the European Union (EU).

The European Commission has revised its projections downward and now anticipates GDP growth of 0.9% in 2025 and 1.4% in 2026 for the eurozone countries. The reduction in inflation, expected to drop below 2% (1.7% in the eurozone in 2026) due to falling energy prices and a stronger euro, along with a robust labor market and domestic consumption, should help avoid the worst.

Following the Covid-19 pandemic and the surge in energy prices in the wake of Russia's invasion of Ukraine, Brussels now cites Trump's trade war to explain Europe's poor performance. "Risks to the outlook remain tilted to the downside," said Valdis Dombrovskis, the commissioner for the economy. Indeed, the Commission's experts have worked from the current situation, where Washington has increased its tariffs to 25% on steel, aluminum, and cars, and to 10% on a wide range of products.

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