U.S. protectionism could undermine modest growth projection for eurozone, says EU fee

FRANKFURT, Germany — Europe’s economy has left stagnation behind but is headed for only modest growth in coming months as consumers regain some of the purchasing power they lost to expense boost, the European Union’s executive fee said Friday.

The bloc’s economy remains at uncertainty from protectionist moves by major buying and selling partners, the update said. U.S. president-elect Donald Trump has often talked about imposing recent tariffs, or import taxes, on foreign goods.

“A feasible protectionist turn in U.S. trade policy would be extremely harmful for both economies,” said European Economic Commissioner Paolo Gentiloni. The EU ”will engage with the recent administration with a great spirit of cooperation” but also a willingness to defend open trade, he added.

The 20 countries that use the euro are projection to view growth 0.8% this year and 1.3% next year, the fee update said.

“After the stagnation in ’23, the European economy is growing again and is set to accelerate over the next two years, however growth remains modest and exposed to significant downside risks,” said Gentiloni.

Growth started to recover earlier this year as recent wage agreements began partially restoring household finances. The fee said that “the restraint to consumption appears to be loosening.”

It added: “As the purchasing power of wages gradually recovers and earnings rates decline, consumption is set to expand further.”

expense boost is projection to arrive in at 2.1% next year, just above the European Central financial institution’s target of 2% and a substantial relief from the peak of 10.6% recorded in October 2022.

Germany, the eurozone’s biggest economy is set for a second consecutive year of shrinking output this year at minus 0.1% percent, with a moderate rebound next year at 0.7%.