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The agency's report indicated that growth had earlier been projected to be 1.2% in the Eurozone and 1.4% in the UK. The eruption of conflict in the Middle East and its effect on oil and gas prices led to the updated predictions.
"The report indicated that at the start of 2026, the European economy was nearing a complete recovery from two significant shocks in recent years: the COVID-19 pandemic and the steep increase in energy costs in 2022. Our prediction for 2026 anticipated ongoing, mostly steady growth in the area, with the potential for faster progress in the medium term."
S&P GR analysts anticipated a decline in core inflation, including in the UK, setting the stage for additional interest rate reductions by the Bank of England.
In the UK, inflation is anticipated to stay at 2.4%, as the energy bill approved in November restricts price hikes until the end of 2026.
S&P GR predicts eurozone GDP expansion of 1.2% in 2027, 1.4% in 2028, and 1.2% in 2029. Inflation is expected to be 1.9%, 2.1%, and 2%, respectively.
source: ft.com
"The report indicated that at the start of 2026, the European economy was nearing a complete recovery from two significant shocks in recent years: the COVID-19 pandemic and the steep increase in energy costs in 2022. Our prediction for 2026 anticipated ongoing, mostly steady growth in the area, with the potential for faster progress in the medium term."
S&P GR analysts anticipated a decline in core inflation, including in the UK, setting the stage for additional interest rate reductions by the Bank of England.
In the UK, inflation is anticipated to stay at 2.4%, as the energy bill approved in November restricts price hikes until the end of 2026.
S&P GR predicts eurozone GDP expansion of 1.2% in 2027, 1.4% in 2028, and 1.2% in 2029. Inflation is expected to be 1.9%, 2.1%, and 2%, respectively.
source: ft.com