Eurozone set for 2026 slowdown as energy shock hits growth and prices

Deutsche Bank Research warns the euro area will slow sharply in 2026, with GDP growth around 0.5% (down from 1.1%), a Q2 contraction followed by stagnation and a later modest rebound. The energy shock lifts the euro-area energy import bill and inflation (HICP averages about 3.1% in 2026, 2.5% in 2027), and ECB policy is expected to tighten by about 50 basis points to 2.50% by September. Germany is seen at ~0.5% growth, France ~0.5%, Italy ~0.4% in 2026, while the UK could fare relatively better around 1.0% growth; downside risks rise if Hormuz-related disruptions persist.