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The pace of real GDP growth across European economies in 2025 varied significantly, reflecting differences in how quickly economies rebound and develop.
According to Eurostat, real GDP in the European Union rose by 1.5% in 2025, higher than the 1.1% rise in 2024. However, the growth picture was not uniform across member states, with distinct advantages and challenges.
Ireland recorded standout real GDP growth of 12.3% in 2025. The figure is largely attributed to the concentration of multinational corporations—mostly from the United States—headquartered in Ireland due to favorable tax policy.
Jacob Funk Kirkegaard, a Bruegel research fellow, said Ireland’s GDP growth largely reflects accounting activities of these multinationals rather than momentum in the domestic economy.
Outside Ireland, Malta and Cyprus posted high growth rates of 4% and 3.8%, respectively. North Macedonia, Croatia and Bulgaria also achieved growth above 3%, indicating robust development after stripping inflation from GDP data.
Professor Miguel Leon-Ledesma of the University of Exeter argued that these economies, which have less developed bases, are leveraging technology and investment to grow faster.
Among the EU’s four largest economies, Spain led with real GDP growth of 2.8%, while Germany stood at only 0.2%. Italy and France also showed limited improvement, with growth of 0.5% and 0.8% respectively.
Germany, along with Finland, recorded the lowest growth among 32 European countries with data.
Kirkegaard linked Germany’s slowdown to the “second China shock,” saying Chinese exports have surged globally and affected traditional European exporters such as Germany and Italy.
In contrast, Spain’s growth model was less affected by the China shock. The Spanish government implemented an open immigration policy that boosted population and the labor force, supporting growth.
Leon-Ledesma noted that although Spain had the highest growth among the EU’s large economies, labor productivity declined by 0.3% and output per hour worked rose only 0.4%. He said this points to growth being driven mainly by job creation rather than productivity gains.
Kirkegaard added that a large portion of Spain’s growth came from population increases due to immigration. While GDP rose, personal income might not have changed, contributing to a perceived lack of improvement in people’s economic well-being.
OECD forecasts suggest Spain will reach 2.2% real GDP growth in 2026, continuing to lead the five largest EU economies, far ahead of the United Kingdom at 1.2%. The forecast also cites Spain’s tourism rebound as contributing significantly to growth, a trend common among Mediterranean economies.
Italy benefits from the EU’s NextGenerationEU post-pandemic stimulus package, though it remains affected by the China shock in global export markets. France, despite political instability, remains relatively resilient.
Nordic growth also diverged. Denmark posted 2.9% growth, while Finland recorded the lowest figure. Sweden grew 1.5%, in line with the EU average; Iceland and Norway posted 1.3% and 1.1%, respectively.
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