Eurozone Growth Forecast 2026 Dampened by Stagnant Productivity and Demographic Decline

The European Commission forecasts economic growth in the Eurozone at 1.2% for 2026, with France expected to see a more modest 0.9%. However, these projections face significant challenges due to structural obstacles. Since mid-2017, labor productivity across the Eurozone has stagnated, partly because of weak research and development investments and inefficiencies in education systems. In France, while productivity has shown some recovery since early 2022, it remains 2.4 points below pre-pandemic levels, with concerns that this improvement may be temporary as 'zombie' companies exit the market.

Adding to the constraints, the working-age population in the Eurozone is set to shrink by 0.5% annually, with France experiencing a 0.2% annual decrease toward the decade's end. This demographic trend poses a significant challenge to GDP growth prospects. Employment rates, which have seen slight improvements, especially in Northern Europe, are expected to plateau, limiting potential growth contributions from increased workforce participation.

Separately, France's efforts at reindustrialization face setbacks due to a lack of a clear industrial strategy and the absence of dedicated budgetary support, exacerbating economic uncertainties.

Patrick Artus, economic advisor at Ossiam and member of the Cercle des économistes, underscores these concerns, emphasizing that without improvements in productivity and demographic support, the ambitious growth forecasts for 2026 are unlikely to materialize.