Eurozone countries outlook for 2026 in World Economy News 01/02/2026 Germany Despite a disappointing year in 2025 and still sluggish sentiment indicators, there are good reasons to be more positive about the German economy. The latest macro data indicate a clear turning point in industry at the end of last year. Industrial orders have now increased for three consecutive months, and even the argument that bulk orders drove the November surge does not really concern us; with the fiscal spending programme, more of these bulk orders will come this year. In fact, bulk orders could be the new normal, not the exception. While industry is going through a soft and tentative period of cyclical turning, admittedly at still shockingly weak levels, the announced infrastructure and defence investment plans should finally begin to reach the economy this year. Critics often overlook the sluggishness of Germany’s federal decision-making process. It took until late last year for parliament to approve the 2026 budget and almost 30 military procurement contracts. Needless to say, the cyclical upswing will not remove the structural challenges after years of de facto stagnation, but the return to growth could be a first step to end the national depression. Carsten Brzeski France In France, uncertainty surrounding the budget is finally easing with the adoption of a compromise budget. The text includes a tax increase, mainly targeting large companies and investors, as well as a very slight reduction in the state’s operating expenses. This should allow the deficit to reach 5% of GDP in 2026, compared with 5.4% in 2025 – still higher than previously promised – and would push public debt to 118% of GDP in 2026. The end of this long budgetary saga reduces economic uncertainty and lowers the risk of early elections, which will support economic activity in 2026 and help bring French-German spreads to their lowest levels since summer 2024. However, the budget remains unfavourable to businesses, and higher taxes could weigh on investment and job creation. We expect 1% growth in 2026, supported by improving industrial prospects and a modest rebound in consumption. With no structural issues addressed, the preparation of the 2027 budget will be even more challenging and will continue to weigh on economic activity in France, keeping growth below the European average. Charlotte De Montpellier Italy Recent data has confirmed that resilience in the labour market, inflation under control and decent wage growth should have allowed further gains in Italian households’ purchasing power by the turn of the year. 2026 looks set to start along the same lines as last year, with modest growth and private investment again the leading driver, almost on par with private consumption. Investment growth will likely be led by the infrastructural component of construction, spurred by the upcoming deadline of the EU-funded recovery and resilience programme. Consumption growth should build on further gains in disposable income and on a gradual reduction in households’ saving ratio after recent post-Covid highs. With deficit consolidation a top priority, there will be no fiscal room to provide any significant direct growth push. However, as fiscal discipline and political stability are being rewarded by shrinking government bond spreads, the entire economy should indirectly benefit through lower financing costs. Paolo Pizzoli Spain Spain’s economy remains a eurozone outperformer with 2025 growth