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Gross domestic product was flat with a zero increase in the
final quarter of 2024 in the 20-nation eurozone, EU statistics
agency Eurostat said.
The economy slowed from 0.4% growth in the third quarter as
businesses were unsettled by possible trade disruptions under
the new administration of U.S. President Donald Trump and as
consumers remained cautious with spending after being stung by
inflation.
Germany, laboring under multiple headwinds including the loss of
cheap energy from Russia, choking bureaucracy and political
paralysis in Berlin, shrank by 0.2% in the fourth quarter.
The German economy, Europe's largest, also shrank for all of
2024 by 0.2%, the second straight year of declining output. And
the outlook for this year isn't much better. The government
slashed its 2025 forecast on Wednesday to 0.3% from 1.1%.
Leading economies Germany and France are both unsettled by
political turmoil that has left businesses and consumers
uncertain about what the future holds in terms of government
spending, regulation and taxes. Germany’s confusion could clear
up after a national election on Feb. 23 following the collapse
of Social Democratic Chancellor Olaf Scholz’ governing coalition
that had been mired in months of bickering over what to do about
the economy.
It may take longer for France to emerge from paralysis, since
the parliament is deeply divided and a new election can't be
held until July at the earliest. Political forces are at odds
over how to address the country’s large budget deficit.
Business prospects have been unsettled by the election of Trump,
an advocate of new and higher import tariffs that could hurt
Europe's export-oriented economy. Slowing uptake of electric
vehicles and the cancellation by Germany of purchase subsidies
for EVs has meant less demand for parts suppliers. On top of
that, consumers remain wary about spending even though inflation
has come down from its double-digit peak in late 2022.
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