The German economy will see a noticeable pickup in growth following stagnation over the past few years, while Spain, once a major contributor to Europe's economic growth, is set to see a slowdown.
The rating agency expects 1.2-per cent growth in the eurozone and 1.4-per cent growth in the United Kingdom in 2026 after growths of 1.3 per cent and 1.4 per cent this year respectively.
It anticipates growth in most other European countries to remain largely stable in 2026 due to moderation in monetary policy rates, robust private-sector balance sheets and the digital transformation of the economy. At the same time, fiscal policies other than Germany's will tend toward consolidation.
Consumer spending is expected to rise at a similar pace in 2026 as in 2025—1.4 per cent after 1.3 per cent in the Eurozone, and 1.1 per cent after 10 per cent in the United Kingdom.
The labour market will be less supportive, and real wage growth is likely to slow but remain positive, at around 1 per cent on average. However, we believe that savings rates could decrease as confidence normalises and interest rates ease.
It expects private investment to contribute positively to growth.
ALCHEMPro News Desk (DS)
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