Steady but Strained: Europe’s Path Through Mounting Global Challenges

While Europe has avoided some of the sharper policy and inflationary swings seen in other major economies, it is not without its challenges. The region continues to face geopolitical tensions, a fragmented political landscape, and uneven economic momentum across member states. Nevertheless, Europe’s steady policymaking, gradual labour market reforms, and sustained fiscal support have provided a degree of resilience in a volatile global backdrop. Investment is forecast to rise, manufacturing is beginning to stabilise, and financial conditions are easing in line with lower interest rates. Together, these elements contribute to a more stable credit environment at the sovereign level and offer some macroeconomic ballast in the face of external and domestic headwinds.

European Macroeconomic Landscape: Growth, Politics, and Energy

Europe’s labour markets have shown notable resilience even under trade and geopolitical stress, aided by structural reforms and fiscal buffers. Most forecasts…