Small fiscal loosening in the euro-zone next year

Draft 2026 budget plans submitted to the European Commission this week point to a moderate loosening of fiscal policy next year. In practice we think that the degree of policy loosening will be somewhat smaller than the plans indicate and will give the euro-zone economy only a small boost. Meanwhile, despite the euro-zone’s exports to the US slumping to a multi-year low in August, total exports have held up relatively well over the past few months.