1、We expect 2025 to be another chal l enging year for the Euro area economy.First,nUS President-el ect Trumps pl an to impose tariffs is l ikel y to weigh significantl yon growth,with much of the drag stemming from higher trade pol icyuncertainty.Second,the negative trade effects are l ikel y to be re

2、inforced bycontinued structural headwinds in the manufacturing sector,incl uding highenergy prices and competitive pressures from China.Third,we expect ongoingfiscal consol idation across the Euro area.That said,we see several reasons for continued growth,rather than a Euro areanrecession.Growth mom

3、entum remains modestl y positive;consumption is l ikel yto recover given rising real incomes and el evated savings;and we expect theSouth to show continued resil ience compared with the North.We therefore forecast Euro area growth of 0.2%in Q1 and Q2,0.1%in Q3 andn0.2%in Q4.This resul ts in area-wid

4、e growth of 0.8%for 2025,notabl y bel owthe 1.2%consensus.We l ook for the weakest growth in Germany(0.3%),fol l owed by I tal y(0.6%)and France(0.7%),with Spain again outperformingnotabl y(2%).Given our subdued growth outl ook,we expect the unempl oyment rate to risennext year,reaching 6.7%by earl

5、y 2026.We see wage growth sl owing to 3.2%by 2025Q4,as pay catch-up compl etes and the l abour market softens.Underl ying inflation has resumed its downward trend since the summer,and wel ook for headl ine and core inflation to return to 2%sustainabl y by end-2025,driven by a further cool ing in ser

6、vices inflation.Subdued growth and continued disinflation impl y rising pressures for the ECB tonl ower rates and we expect the Governing Council to cut the deposit rate to1.75%in Jul y.We bel ieve that 25bp cuts remain more l ikel y than 50bp steps butsee a l ow hurdl e for a step-up in the pace in