The European economy has emerged from its worst period following high inflation and the energy shock that persisted after the pandemic and since the start of the war between Russia and Ukraine. The economy, which had stagnated over the past few years, grew by 0.4% in 2023, and it’s forecasted to grow by 1.0% for European Union countries and 0.8% for Eurozone countries. Unemployment is also at its lowest, at 6.1% for the EU and 6.6% for countries outside the EU. With inflation under control, the European Central Bank (ECB) cut the interest rate on June 4 to 3.75% from 4%. Below is an overview of the top five largest economies in Europe.

 Germany

Germany, the largest economy in Europe and known for balancing its budget well, has seen its economy stagnate over the past few years. The economy experienced a minor recession in 2023, with its GDP declining by 0.3%. Its GDP is expected to grow by 0.1% in 2024 and 1% in 2025.

Germany has the lowest unemployment rate in Europe at 3.1%, compared to 6.1% for the EU and 6.6% for other European countries. In 2023, more than 80% of the population aged 20-64 were employed. The unemployment rate is expected to remain low for the next few years.

Germany has managed to reduce inflation from 6% in 2023 to 2.4% in 2024. High energy prices following Russia's invasion of Ukraine contributed to the spike in inflation. The inflation rate is expected to normalize with the decline in energy prices and wage growth.

 United Kingdom 

Since the United Kingdom finalized its exit from the EU, its economy has struggled to grow. The economy grew by only 0.1% in 2023. Consumption was low as more people chose to save rather than spend. Imports and exports of goods also declined significantly. The economy may fare better if consumers decide to spend more and if public and residential investments increase. The UK economy is expected to grow by 0.5% in 2024 and by 1.4% in 2025.

 The labor market in the UK is improving. By early 2024, job openings had fallen by 30%. The unemployment rate is currently 4.4%, up from 3.8% in December 2023. The large increase in unemployment could be related to a spike in immigration, which has also helped ease pressure on wage growth.

The UK has managed to bring inflation under control. Inflation declined from 10.1% in March 2023 to 2% in May 2024, driven by lower prices for goods and food and reduced energy bills. However, service inflation remains a concern for central bankers, standing at 5.7% in May 2024.

 France

 France’s economy is expected to grow by 0.7% in 2024 and by 1.3% in 2025. Increased consumption and wage growth will be the main factors boosting the economy. The nation does not expect significant effects from household and business investments.

France has the highest unemployment rate compared to the other largest economies in Europe. The unemployment rate in the first quarter of 2024 was 7.5%, and it is expected to increase to 7.7% by the end of the year and 7.8% in 2025.

 Despite high unemployment, France has managed to bring inflation under control. After recording 7.0% inflation in the first quarter of 2023, the nation reduced inflation to 3.0% in the first quarter of 2024. The inflation rate is expected to decrease to 2.5% by the end of this year.