Growth in the euro area expanded at a slower pace than expected in the first quarter of the year thanks to tensions surrounding tariffs.
The EU’s official data agency said on Thursday that the 20-country single currency area recorded an expansion of 0.3% in the January-March period compared to the previous quarter.
This marks a slight acceleration from the 0.2% growth recorded in the final quarter of 2024, but was down from the initial 0.4% figure estimated last month.
The first quarter growth figure for the European Union as a whole came in unchanged at 0.3%, Eurostat said.
Ireland recorded the fastest rise in GDP – up 3.2% in the quarter, due to an increased activity at its multinationals. Contractions were measured in Slovenia (-0.8%), Portugal (-0.5%) and Hungary (-0.2%).
This updated data confirms that the UK outpaced Germany (+0.2%), France (0.1%) and Italy (+0.3%).
Meanwhile, the eurozone employment change for Q1 was at 0.3% and 0.8% year-on-year. A strong performance in industrial output added to signs of economic momentum.
In March, eurozone industrial production jumped by 2.6% on a month-over-month basis, marking the sharpest one-month gain since November 2020. The figure beat expectations of a 1.8% rise and followed a revised 1.1% gain in February.
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Eurostat data revealed robust monthly increases in capital goods (3.2%), durable consumer goods (3.1%) and non-durable consumer goods (2.3%). Intermediate goods saw a more modest rise of 0.6%, while energy production dipped 0.5%.
It comes as president Donald Trump has now reduced his 20% tariffs on the EU to 10% for 90 days, establishing a window for Brussels and Washington to negotiate. The EU has threatened to impose countermeasures on the US if the trading powers fail to strike a deal.
Lars Klingbeil, German finance minister, reiterated on Thursday that the EU was poised to retaliate to Trump’s tariffs.
“We expect that the negotiations will lead to a good result, but I would also like to make it very clear that we are prepared to act if this does not succeed,” he said.
Elsewhere, the UK economy grew faster than expected in the first quarter of 2025, according to official figures, from the Office for National Statistics (ONS).
Gross domestic product (GDP) — the standard measure of an economy's value — grew 0.7% in the first quarter of 2025.
This ahead of market estimates of 0.6% and a marked improvement of the 0.1% growth recorded over Christmas.
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