UBS Cuts Eurozone GDP Growth Forecast for 2025-2026 Due to US Tariffs

UBS analysts have cut their eurozone GDP growth forecast for 2025 and 2026 due to the impact of US tariffs on European goods.

The bank’s new forecast sees the eurozone economy grow by 0.5% in 2025 and 0.8% in 2026. Previously, GDP growth was expected to be 0.9% and 1.1%, respectively. UBS raised its 2027 forecast to 1.5% from 1.2% due to the lagged effect of higher government spending.

The imposition of tariffs in the US is likely to cause significant damage to the European economy in the next three to four quarters, while fiscal stimulus through increased investment in defense and infrastructure will only begin to provide significant support to growth from 2026, UBS said in an analytical note.