Europe Chart Pack (November 2026)

The euro-zone economy slowed a little in Q3 and is likely to continue growing at a sluggish pace in Q4. The core economies are weaker than much of the “periphery” with France in a mild recession and Germany’s growth sustained largely by its fiscal stimulus. Meanwhile, the labour market appears to have loosened a little in recent months with unemployment edging up and vacancies falling. This supports our view that there is little risk of significant second-round wage effects and that the inflation rate will not rise much further. Against this backdrop, we think the ECB will raise its key policy rate only once more in this cycle before beginning to cut rates next year. While Bund yields are likely to fall in the coming months, concerns about France’s public finances may cause spreads there to widen further.