The euro zone economy unexpectedly grew by 0.3 per cent in the fourth quarter of 2025 despite geopolitical tensions and widespread uncertainty.

The pace of growth was better than the 0.2 per cent expected by economists and in line with the 0.3 per cent recorded in the previous three months.

The euro zone economy has now expanded for nine consecutive quarters.The European Central Bank (ECB) recently raised its gross domestic product (GDP) forecast for this year to 1.2 per cent, and is widely expected to leave interest rates unchanged at 2 per cent at its first meeting of 2026 next week.

ECB president Christine Lagarde has repeatedly praised the euro zone’s economic “resilience”, with growth proving stronger than forecast at the start of 2025 despite US President Donald Trump’s tariffs.

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Germany, Europe’s biggest economy, expanded last year for the first time since 2022 and is expected to accelerate further as the government borrows heavily to invest in infrastructure and defence.

The euro was little changed after the data, down 0.5 per cent against a broadly stronger dollar at $1.191.

Traders’ interest rate expectations also barely shifted, with a roughly 25 per cent chance of a further quarter-point cut this year, according to swap markets. - Copyright The Financial Times Limited 2026