The eurozone economy has slowed down since the beginning of 2026, with gross domestic product growing by 0.1% in the first quarter compared to the previous three months, according to Eurostat. Among the region’s largest economies, Spain again led the way, with growth of 0.6%. Germany grew by 0.3%, while France unexpectedly stagnated.
Just hours before the European Central Bank set interest rates, Eurostat released data showing that consumer prices rose 3% in April, the highest since September 2023.
The European Central Bank, which is expected to leave the deposit rate at 2%, is still adjusting its response to the economic impact of the conflict, although markets believe the rate will be raised in June and twice more before the end of the year.
Although core inflation – which excludes energy and food prices – slowed in April, some monetary tightening may be needed as surveys show price expectations of companies and households are rising, Bloomberg analysts said.
But that could jeopardize economic growth: private sector activity fell this month for the first time since 2024, according to a Bloomberg Economics business survey.
European Commission President Ursula von der Leyen warned that the effects could be felt for “many more years”. France and Italy have already cut their growth forecasts, while Germany halved its 2026 forecast to 0.5 percent.
