BusinessEurope Economic Outlook Spring 2024 - EU economy to slowly return to growth, but long-term challenges remain

Economic situation

The EU economy is expected to grow by 1.2% in 2024, increasing to 1.8% in 2025. This is a 0.4 pp downward revision for 2024 in comparison to our Autumn Economic Outlook as EU industrial producers face continuing challenges resulting in the lowest level of capacity utilisation (excluding Covid) for 11 years.
Headline inflation is to continue its steady decline, averaging 2.9% and 2.6% respectively in the EU and Euro Area in 2024, before approaching the ECB’s 2.0% target in 2025.
Increased private consumption and investment are set to be the main drivers of growth in 2024 with EU investment growth reaching 3.4% in 2025 on the back of lower interest rates.

Economic projections

Policymakers must urgently address the structural challenges facing European industry vis-à-vis global competitors, such as high energy prices and an excessive regulatory burden. It’s crucial that the EU’s industrial base is maintained for our economic security and prosperity.
The ECB must continue to carefully calibrate monetary policy to ensure a timely return to the 2% inflation target. Fiscal policy should continue to be supportive of monetary policy, and it will be particularly important that the Commission ensures that the new economic governance framework effectively supports Member States in putting their public finances on a more sustainable footing.
EU leaders must use the recommendations of the Letta, and forthcoming Draghi report, to develop a long-term European growth strategy, including strengthening the single market, deepening capital markets, and supporting structural reforms in Member States, to put competitiveness at the heart of the next political cycle.