European Economic outlook – February 2026

This edition of the European Economic Outlook explores how Europe’s adoption of AI could reshape jobs and productivity, highlights the outlook for long and short-term interest rates and assesses how easing inflation and consumer caution may shape the continent’s wider economic trajectory.

Key observations The signing of two trade deals; the EU-India and the EU-Mercosur, may see small economic payoff in the near term, due to limited bilateral trade volumes and lengthy tariff phase in schedules. Europ's manufacturing sector may finally be turning a corner, with early signs of a fragile recovery emerging from a period of pronounced weakness. Fiscal support in major economies appears to be bolstering demand and helping stabilise industrial activity. Headline Eurozone inflatio...

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Authors: Yael Selfin

Published Date: 17 March 2026