While EU growth has initially surprised to the upside, the future depends on strengthening domestic drivers (consumption and investment) in the face of a highly volatile international trade landscape defined by U.S. tariffs and geopolitical risk.

General Economic Perspective

The performance of the European economy in the first nine months of 2025 exceeded expectations. Although this improved performance was initially due to an increase in exports ahead of the expected tariff hike, the continued growth in the third quarter demonstrates the resilience of the European economy.

• Real GDP growth: EU real GDP is projected to grow by 1.4% in 2025 and 2026, rising slightly to 1.5% in 2027. The Eurozone will reflect a similar trend, with growth of 1.3% in 2025, 1.2% in 2026 and 1.4% in 2027.
• Growth Drivers: Future growth will be supported by domestic demand. Investment is expected to pick up, driven by higher deployment of Recovery and Resilience Mechanism funds and increased investment in equipment spurred by the German fiscal impulse.
• Inflation: Headline inflation in the Eurozone is expected to fall to 2.1% in 2025 and remain around 2% in the following years. In the EU, inflation will be marginally higher, falling to 2.2% in 2027.

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Source: European Economic Forecast. Autumn 2025

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International Context

The unilateral imposition of tariffs by the US administration on almost all of its trading partners marks a significant departure from the multilateral trade order. It is assumed that the tariffs announced by the US will remain in place throughout the forecast horizon.

The report states that the average effective tariff faced by the EU on its exports to the US is around 10%, calculated on the basis of the tariff rates imposed on each exported good, weighted by the share of that good in total merchandise exports to the US.

Although the average effective tariff is higher than in previous forecasts, the EU still enjoys lower average tariff rates compared to other major global players, such as China or India. This situation provides the EU economy with a “modest relative advantage” in the U.S. market compared to those competitors.

US tariffs on third countries (such as China) could generate spillover effects for the EU, as a large amount of Chinese exports could be redirected to other markets, including the EU. While in the short term this amplifies economic losses, in the long term trade detour could generate a beneficial impact as the EU gains market share in the US.

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Economic Data for Spain

In terms of exposure to U.S. tariffs, Spain is among the least exposed countries in the EU due to a limited volume of goods exports to the U.S. relative to its GDP.

Spain’s situation is highlighted by more robust real GDP growth than the EU average in 2025, albeit with a significantly higher unemployment rate.

The forecasts for Spain are as follows: