A famous economist surprises with a forecast. Europe is bouncing back despite pressure from Trump and China. Six reasons for an unexpected turn [ANALIZA]

Reason one. Less pressure from the US

American voters now blame Trump rather than his predecessor for high inflation. Trump must take this into account before the November congressional midterm elections.

For this reason, I expect he will not aggressively raise price-driving tariffs this year. Therefore, later in the year, the euro zone should experience a less strong impact of unfavorable factors from the US than after Trump introduced high tariffs in April 2025.

Reason two. The ECB is taking appropriate steps

The loose monetary policy of the European Central Bank (ECB) is bringing results. The mortgage loan growth rate in the euro zone increased from 0.5%. at the end of 2024 to 2.8 percent in December last year.

Data on building permits and construction orders also indicate that in 2026 there will be another growth in residential construction, which will further strengthen in 2027.

Reason three. The end of the energy crisis

The euro area has largely digested the price shock on the energy market in 2022-2023. Thanks to lower oil and gas prices, savings and a structural shift away from energy-intensive industries such as chemicals towards other activities, the euro zone's energy import bill has fallen from a peak of almost 6%. in 2023 to less than 2.5 percent in the third quarter of 2025. Thanks to this, the region has more funds at its disposal for domestic expenditure.

Reason four. Lower unemployment

The unemployment rate in the euro zone fell to 6.2% in December 2025. This is the lowest level since the introduction of the euro in 1999. This should support consumer confidence and spending in the long term.

Reason five. Paris rises from her knees

The risk that France will plunge into a serious political crisis this year, which would lead to early parliamentary elections, has decreased. Since the Socialists did not join left- and right-wing forces in a no-confidence vote aimed at overthrowing the minority government, Prime Minister Sebastien Lecornu will likely be able to continue his work for now.

French Prime Minister Sebastien LecornuTom Nicholson/Stringer/Getty Images

Although the 2026 budget, adopted on February 2, does not significantly contribute to solving the country's basic fiscal and structural problems, it does not significantly worsen them either.

Due to the now lower political risk, the economic sentiment in France has already improved according to the European Commission's indicator. They rose from 94.6 in December and a low of 90.2 in June to 100.4 in January. This is roughly equivalent to a long-term average of 100.

Reason six. Light at the end of the tunnel for Germany

The economic impulse in Germany, despite the previous downtime, is gradually gaining momentum. Berlin will not be able to spend the money as quickly as the German government and many other experts expect. Nevertheless, this impulse should increase Germany's economic growth rate this year by approximately 0.3 percentage points.

Thanks to a revival in housing construction and a less gloomy outlook for exports, German economic growth may increase from 0.3 percent. last year to 0.8 percent in 2026. The fact that the fiscal impulse is slowly reaching the economy is evidenced by the fact that since last autumn the order portfolio in the processing industry has been growing significantly thanks to domestic orders.