Market News

Europe’s economic momentum nearly stalled in the second quarter of 2025, with growth barely registering and industry output sliding sharply—raising concerns over whether the region’s recovery is already running out of steam.

According to Eurostat’s second estimate released on Thursday, seasonally adjusted GDP in the euro area rose by just 0.1% in the three months to June, unchanged from the initial flash reading. The wider European Union (EU) grew by 0.2%, also in line with earlier estimates.

These figures mark a stark slowdown from the robust first quarter, when GDP expanded by 0.6% in the eurozone and 0.5% across the EU thanks to strong export growth.

In contrast, the United States economy bounced back strongly, posting a 0.7% quarterly expansion following a slight contraction in the first quarter. On an annual basis, eurozone GDP rose 1.4%, well behind Washington's 2.0% pace.

Diverging national performances

Beneath the headline figures, the recovery remains highly uneven across the bloc.

Spain led the pack with 0.7% quarterly growth, fuelled by strong domestic demand and capital investment. Portugal followed with a 0.6% gain, while France managed a modest 0.3% expansion.

However, both Germany and Italy, the eurozone’s largest and third-largest economies, slipped by 0.1%.

For Germany, the contraction reflects continued weakness in investment, particularly in construction and capital goods, while Italian output suffered from subdued consumption and softening industrial activity.

Ireland saw the steepest drop, with output contracting by 1%.

Elsewhere in the EU, growth was more robust in Eastern Europe, with Romania and Poland expanding by 1.2% and 0.8%, respectively, helped by resilient domestic demand and inflows from the Next Generation EU (NGEU) programme.