EU Cuts Growth Forecasts Amid US Trade Tensions

The European Commission has lowered its 2025 economic growth forecasts for the eurozone and EU, citing heightened trade tensions with the US under President Trump's administration. The eurozone is now projected to grow by 0.9% in 2025, down from a previous estimate of 1.3%, while EU growth is forecast at 1.1%, reduced from 1.5%. Germany's export-reliant economy is expected to stagnate due to new US tariffs and weakening global demand. Despite these challenges, eurozone unemployment is forecast to fall further and inflation is expected to meet the ECB's 2% target sooner than anticipated. The Commission warns of downside risks from further trade fragmentation and climate-related disasters. Some temporary relief has come from a partial rollback of tariffs and optimism for future trade deals, but officials remain concerned about ongoing policy unpredictability.