Europe’s top economies all expand in defiance of trade turmoil

A reading from the euro zone as a whole is due later Friday, with analysts estimating growth of 0.2% — slightly slower than in the previous three months.

• Germany, Spain, France, and Italy saw GDP growth in Q4 despite trade tensions
• Spain led euro-zone growth with a 0.8% GDP rise, driven by household consumption
• Eurozone inflation steady near ECB's 2% target; interest rates unchanged

Did our AI summary help?

The euro-zone’s largest economies all grew at the end of last year, demonstrating resilience to the trade turmoil unleashed by Donald Trump.

German gross domestic product rose 0.3% in the fourth quarter, advancing for the time since the start of 2025 and beating an initial estimate.

Spain, meanwhile, was once again the standout performer with speedier-than-expected expansion of 0.8%. France and Italy saw output increase 0.2% and 0.3%.

A reading from the euro zone as a whole is due later Friday, with analysts estimating growth of 0.2% — slightly slower than in the previous three months.

The bloc is holding up well after the US raised tariffs last year and should see expansion of more than 1% in 2026 as a spending splurge hauls Germany out of its long malaise. It’s too soon to sound the all-clear, though, following Trump’s latest trade threats over Greenland and a rally in the euro that risks imperiling exporters.

The region can, at least, breathe easier as regards inflation, which is settling around the European Central Bank’s target, keeping interest rates steady at 2%.

Spain said Friday that consumer prices rose 2.5% from a year ago in January — just ahead of expectations, though that’s likely to moderate in the months ahead. An ECB poll showed inflation expectations over the next 12 months held steady at the end of 2025.

That survey of euro-area consumers suggested a slightly more positive mood around the economy. Other parts of the bloc also recorded growth: GDP was up by 0.5% in the Netherlands, 0.2% in Austria and 1.7% in Lithuania.

In Germany, Chancellor Friedrich Merz’s outlays on infrastructure and defense are driving a rebound that should gain momentum as the year progresses — particularly if he can also deliver on promises to slash bureaucracy and boost competitiveness.

The government predicts growth will reach 1% this year — progress for a country that only narrowly avoided a triple-dip recession in 2025.

Businesses may need more convincing. Confidence remains muted, and while a trade deal between Europe and India opens up new export avenues, it may also draw Trump’s ire.

Spain’s economy has outperformed its peers for several years, helped by a booming tourism industry and immigration. Its latest growth success was fueled by household consumption, its statistics office said.

For France, the second half of 2025 was clouded by another government collapse and rows over tax hikes and spending cuts that are needed to rein in a gaping budget deficit.

Fourth-quarter investment, however, increased by 0.2% while consumer-spending growth accelerated to 0.3%. For 2025, GDP rose 0.9% — matching the pace the government was banking on in its budget plans.

Finance Minister Roland Lescure said that resilience bodes well for this year.

“Business turned up in 2025 with investment and exports,” he told TF1 television. “I hope that in 2026 we’ll at least get the 1% we’re expecting.”