[PAGE_3]Summary[/PAGE_3]
[PAGE_6]The international context [/PAGE_6]
[PAGE_7]Households[/PAGE_7]
[PAGE_10]Enterprises[/PAGE_10]
[PAGE_16]Tariff increases : our baseline scenario [/PAGE_16]
[PAGE_26]Focus: liberation day, the risky scenario[/PAGE_26]
[PAGE_33]The scenario in numbers[/PAGE_33]

Paola MONPERRUS-VERONI

Our scenario continues to assume a continued moderate recovery in household consumption. While job creation has lost momentum, it remains positive and we expect the unemployment rate to rise slightly in 2025 and to fall modestly in 2026. The fundamentals of productive investment have not radically improved. However, these negative factors must be weighed against European ambitions and German decisions. This combination supports the investment profile and justifies an upward revision of our investment forecast in construction, machinery and equipment, and transport goods. Eurozone growth is expected to reach 1.0% in 2025 and 1.5% in 2026. The intensification of the trade confrontation with the US, which is not included in our central scenario, nevertheless poses a downside risk on both sides of the Atlantic.

Paola
 
MONPERRUS-VERONI
Economist

A transatlantic rift has opened. It had been incorporated into our forecast last December in the form of a downward revision to growth to take account of the negative impact of the rise in tariffs on steel and aluminium to 25%, as well as an alignment of the average US tariff with that of the EU. into a downward revision to growth of 0.2 percentage points (pp) as a direct result of lower exports and a further 0.1 pp as a result of increasing uncertainty over investment decisions.

The increase in customs duties on vehicles to 25% has been integrated into this March 2025 scenario; this increase would result in an 8% drop in automotive production in Western Europe with a drain on Eurozone growth of -0.1 pp in 2025. But Europe has also committed more spending on infrastructure investment and on the military, the impact of which offsets the negative effect of US policies, bringing the zone's growth to 1% in 2025 and then to 1.5% in 2026.

The tariffs introduced on 2 April (Libération Day) are therefore not included in our central scenario, but their impact has been quantified in a risk scenario. Assuming no symmetric retaliatory measures from the EU, this scenario introduces a further 0.1 pp decline in GDP growth in 2025, 0.3 pp in 2026 and 0.2 pp in 2027 for the Eurozone.