Economic Outlook 2024: Europe

Europe is likely to experience a modest acceleration in GDP growth compared to last year in most countries, though growth will remain below trend.

As wages outpace inflation, consumer spending on discretionary categories will likely increase.

The diverging growth rates in the manufacturing and service sectors will likely narrow in 2024 relative to 2023.

• Germany will likely continue to struggle with shrinking competitiveness, geopolitical instability and declining Chinese demand for industrial goods.
• 2024 forecast for Germany:
  • Real consumer spending is expected to grow 1.0% YOY
  • Consumer price inflation to increase by 2.9% YOY
  • Central bank interest rate (end of period): 3.0%
  • Real gross domestic product to increase by 0.6% YOY
  • Unemployment rate: 5.6%

• Spain will benefit from robust domestic demand and a global consumer preference for “experiences” over “things.”
• 2024 forecast for Spain:
  • Real consumer spending is expected to grow 2.0% YOY
  • Consumer price inflation to increase by 2.6% YOY
  • Central bank interest rate (end of period): 3.0%
  • Real gross domestic product to increase by 1.5% YOY
  • Unemployment rate: 11.4%

• Italy’s GDP growth is expected to remain broadly the same as in 2023. Italian consumers have relied on their savings to subsidize consumption during high inflation. These savings are now depleted, though real wage growth will provide support.
• 2024 forecast for Italy:
  • Real consumer spending is expected to grow 1.1% YOY
  • Consumer price inflation to increase by 2.5% YOY
  • Central bank interest rate (end of period): 3.0%
  • Real gross domestic product to increase by 0.7% YOY
  • Unemployment rate: 7.9%

• France’s GDP growth is set to accelerate modestly. French consumers will become more confident and scale back their unusually high savings rate seen in 2023.
• 2024 forecast for France:
  • Real consumer spending is expected to grow 1.1% YOY
  • Consumer price inflation to increase by 3.0% YOY
  • Central bank interest rate (end of period): 3.0%
  • Real gross domestic product to increase by 1.3% YOY
  • Unemployment rate: 6.9%

• UK consumers will be one of the greatest beneficiaries of increased purchasing power as inflation falls quickly while wage growth remains elevated. Some mortgage holders may yet see their monthly payments increase.
• 2024 forecast for the UK:
  • Real consumer spending is expected to grow 0.8% YOY
  • Consumer price inflation to increase by 3.6% YOY
  • Central bank interest rate (end of period): 4.25%
  • Real gross domestic product to increase by 0.7% YOY
  • Unemployment rate: 4.9%