The figures signal remarkable resilience for a bloc of 350 million people that was expected to succumb to a trade war with the U.S.

International News via Reuters:

The euro zone economy grew quicker than expected last quarter as consumption and investments kicked into higher gear, offsetting low exports and the exceptional uncertainty emanating from U.S. trade policy, Eurostat data showed on Friday.

The figures signal remarkable resilience for a bloc of 350 million people that was expected to succumb to a trade war with the U.S., surging export competition from China and years of military conflict on its eastern border. 

Yet each quarter last year the euro zone produced respectable – if unspectacular – growth, despite industry and exports, the previous engines of expansion, struggling to gain their footing.

SPAIN REMAINS ENGINE OF GROWTH

The bloc’s economy grew by 0.3% on the quarter, above expectations for 0.2% in a Reuters poll, and expanded 1.3% compared with a year earlier, versus economists’ consensus bet for 1.2%.

Spain remained the driver of growth, expanding a quicker-than-forecast 0.8%, but Germany, the euro zone’s largest economy, also seems to be emerging from years of struggles to grow 0.3%, above economists’ estimate of 0.2%.

“The fourth quarter performance (for Germany) is admittedly modest yet still the best quarterly performance in the last three years,” ING economist Carsten Brzeski said. “Increasing new orders and falling inventories bode well for at least a soft turnaround in industry.”

Italy, too, beat forecasts with 0.3% growth while France, hampered by political instability, expanded as predicted by 0.2%.

Ireland, however, created a statistical drag for the bloc as its vast multinational sector, based there for tax reasons, contracted sharply. This is more a statistical effect, however, and does not indicate actual contraction in the economy.

2026 OFF TO A GOOD START

Other figures already suggest that the bloc started 2026 on a relatively strong footing. 

A key sentiment reading out on Thursday showed an unexpected jump, driven by France and Germany, with broad-based gains among all key sectors. 

Meanwhile, industry is showing signs of stabilisation, households have finally started to reduce their historically high savings rate, unemployment is holding near record lows and inflation is steady around the European Central Bank’s 2% target.

Prospects are further boosted by Germany’s spending boom on infrastructure and defence, which may be slow to get off the ground but will have a measurable impact on growth from the second quarter. 

This will end three years of German stagnation and likely support the rest of Europe, as its industry relies on a vast supplier base spread across the bloc. 

Exports are unlikely to recover fully anytime soon, however, as U.S. tariffs, increasingly tough Chinese competition and the dollar’s tumble over the past year point to a permanent shift in trade patterns.

This puts the burden on the domestic economy to find new sources of growth. But economists say consumption has plenty of reserves as does intra-EU trade, keeping prospects relatively upbeat.

Indeed, most projections see growth for years in the 1.2%-1.5% range, or around the bloc’s potential.

This puts the ECB in a very comfortable position as inflation is at target, interest rates are on a neutral setting and growth is at potential – a trinity some policymakers call the nirvana of central banking. 

This is why investors see steady interest rates all year, with only fresh shocks upsetting this outlook.

Reporting by Balazs KoranyiEditing by Peter Graff

In seasonally adjusted terms, the jobless figure remained the same as in December, at 2.976 million, while analysts and economists had predicted an increase by 4,000 in a Reuters poll

International News via Reuters:

The number of people out of work in Germany remained unchanged in January, labour office figures showed on Friday, underscoring a sluggish recovery and persistent lack of momentum in the job market of Europe’s biggest economy.

In seasonally adjusted terms, the jobless figure remained the same as in December, at 2.976 million, while analysts and economists had predicted an increase by 4,000 in a Reuters poll.

The seasonally adjusted jobless rate was unchanged from 6.3% a month earlier, also in line with the forecast.

“There is currently little momentum in the labour market,” labour office head Andrea Nahles said in a statement.

Chancellor Friedrich Merz has promised to haul Germany out of the downturn with a sharp increase in infrastructure and defence spending, but those measures are taking longer than expected to translate into better conditions on the ground. 

Writing by Friederike Heine, Editing by Miranda Murray

Eutelsat, whose shares fell 5% in early Paris trading, is headquartered in France and the French government is its largest shareholder with a 29.6% stake

International News via Reuters:

French Finance Minister Roland Lescure earlier this week blocked Eutelsat’s sale of its ground antennas, he said on Friday, citing national security concerns tied to the satellite operator, the main European rival to Elon Musk’s Starlink.

“These antennas are used for both civilian and military communications. Eutelsat is Starlink’s only European competitor. It is clearly a strategic asset. And so I said no,” Lescure told TV station TF1.

Eutelsat, whose shares fell 5% in early Paris trading, is headquartered in France and the French government is its largest shareholder with a 29.6% stake. On Thursday, the company said its planned sale of passive ground infrastructure to Swedish private equity firm EQT would not proceed.

The deal, initially announced in 2024, had been expected to generate net proceeds of about 550 million euros ($656 million). While a company spokesperson declined to comment on Lescure’s remarks, Eutelsat said that it would benefit from a 5% increase in profit margins over the next three years due to savings from no longer leasing these assets

“This decision is exclusively linked to the critical nature of this activity in terms of French sovereignty and is in no way linked to the quality of the investor,” Lescure wrote on Bluesky following his televised remarks.

Ground antennas, which connect satellites to terrestrial networks, are considered sensitive infrastructure because of their dual-use capabilities in civilian and military communications.

Eutelsat provides satellite services to the French army after it signed a 10-year contract valued at 1 billion euros last year.

Lescure also confirmed the government’s role in the sale of French defense firm LMB Aerospace to U.S.-based Loar Holdings.

The state will retain its “golden share”, while production will remain in France’s Correze region, the minister said. Efforts to identify a French or European buyer for the company were unsuccessful, Lescure added.

($1 = 0.8380 euros)

Reporting by Inti Landauro and Louise Rasmussen in Paris, Gianluca Lo Nostro in Gdansk; Editing by Matt Scuffham

ECB President Christine Lagarde and colleagues have been saying for months the central bank for the euro zone is “in a good place” after seeing inflation fall to its 2% target

International News via Reuters:

Euro zone consumers raised their longer-term inflation expectations to a record high in December, a European Central Bank poll showed on Friday, implying prices were seen growing faster than the ECB’s target pace for years to come.

ECB President Christine Lagarde and colleagues have been saying for months the central bank for the euro zone is “in a good place” after seeing inflation fall to its 2% target, and market expectations remain largely anchored around that level.

But the ECB’s latest Consumer Expectations Survey showed households had nudged up their inflation expectations five years ahead to 2.4% in December, the highest reading since the survey began in 2022 and a 20-basis-point increase from November.

The median respondent saw inflation at 2.8% over the next 12 months, unchanged from November, and at 2.6% in three years’ time, up from 2.5% a month earlier.

Still, ECB policymakers, who use these findings in their policy deliberations, could take comfort in the fact that consumers still expected inflation to come down over the poll’s time horizon.

The ECB is expected to hold its policy rate unchanged at 2% for the foreseeable future, but uncertainty relating, among other factors, to U.S. President Donald Trump’s unpredictable economic policy has kept investors and policymakers on tenterhooks.

Reporting by Francesco CanepaEditing by Peter Graff