Europe

The European economy will pick up modestly in 2024 on the back of stronger private consumption, reflecting easing inflation and tight labour markets. Tight monetary policy in the first half of the year and subdued demand from the US and China (Europe’s main trade partners) will limit the expansion, but once global interest rates start to fall in the second half of the year, economic activity and external demand will pick up. Tourism-dependent economies will do better than manufacturing powerhouses, with Germany remaining the slowest-growing large economy. Far-right parties will do well at the European Parliament elections in June, which we expect will limit the EU’s green policy ambitions. The war in Ukraine will continue, developing into a protracted, lower-intensity stalemate, and Europe will increasingly decouple from Russia as sanctions remain in place for the long term.

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