The euro zone faces economic uncertainty as Germany and France struggle with political and economic turmoil, failing to pass budgets for 2025. Economists warn of a potential decline for Europe without fundamental reforms.
The euro zone ended a turbulent year with Germany and France , its two largest economies, facing political and economic turmoil. This resulted in neither country having a budget in place for 2025. Economists express concern about the trajectory of both countries, warning that the absence of growth, fiscal imbalances, and political deadlock could lead to a decline and diminished standing for Europe as a whole.
The situation differs from past crises as the most pressing problems are no longer concentrated in smaller economies. Instead, Europe's two most significant economies are struggling. Neil Shearing, group chief economist at Capital Economics, stated in December that Europe faces ongoing decline without fundamental reform. He cautioned that without such reform, Europe's future appears bleak, characterized by low growth, persistent fiscal concerns, and a waning global influence amid the intensifying rivalry between the U.S. and China. Analysts predict new parliamentary elections in France next summer. Currently, both countries operate on provisional budgets, extending their 2024 taxation and spending plans into 2025. It remains uncertain when they will agree on a 2025 budget. France's estimated budget deficit for 2024 is 6.1%, with a debt burden projected at 112%, according to the IMF
Euro Zone Germany France Economic Crisis Political Instability
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