Euro zone grows by anaemic 0.1% amid threat of US tariffs

The euro zone economy grew by an anaemic 0.1 per cent in the final quarter of last year as the prospect of US tariffs loomed.

The marginal increase in GDP (gross domestic product) comes against a preliminary estimate of zero per cent growth reported in January.

Eurostat said the unexpected expansion reflects the inclusion of more data from individual euro zone countries, including the Netherlands, the bloc’s fifth-largest economy, which saw output increase by 0.4 per cent.

The economic picture across the bloc was mixed. While Spain grew 0.8 per cent, Italy stagnated and Germany and France both contracted.

If you worked in the UK there is an opportunity to boost your pension

Trump trade - a quick guide to US tariff plans

Declining birth rate means there will be fewer people of working age to support the growing number of pensioners

The Irish economy, in GDP terms, contracted by 1.3 per cent as volatility in the multinational sector weighed on headline growth.

The euro zone economy has flatlined on the back of a manufacturing slump in Germany linked to the energy crisis and a slowdown in external demand, particularly from China.

The bloc is now also facing the prospect of tariffs on exports to the US.

Overnight US president Donald Trump signalled plans for “reciprocal tariffs” on competitor economies, a move that could open the door to an international trade war.

Mr Trump said he had decided to impose the reciprocal duties, telling reporters that US allies were often “worse than our enemies” on trade.

In particular, he singled out the European Union for being “absolutely brutal” in its trade ties with Washington.

His plan to slap tariffs on US imports based on sales taxes in their country of origin could shave £16 billion (€19 billion) off UK economic output over the next two years, according to one calculation.

Mr Trump cited value added tax levied on sales in the European Union as a problem.

Commenting on the latest Eurostat numbers, Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics, said: “The euro-zone economy performed a little better than previously thought in Q4, but growth was still extremely weak and the early signs are that it got off to a slow start to 2025.”

He said the key point was that a 0.1 per cent expansion was not worth getting excited about.

“Both Germany and France experienced contractions in Q4, while Italy stagnated, leaving it up to Spain and other smaller countries to stop the region’s economy from contracting.”

In the same release, Eurostat noted that the number of employed people increased by 0.1 per cent in both the euro zone and the wider EU in the fourth quarter of 2024, compared with the previous quarter.