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Report from
Europe
Modest but continuing growth forecast for EU and
Eurozone
EU and Eurozone economic growth in 2026 will be
modest, either level with or slightly down on 2025,
according to latest forecasts from analysts, banks and the
EU Directorate of Economics and Finance (ECFIN). But
stronger performance is expected in 2027.
According to its report in December 2025, international
professional services provider KPMG, Eurozone GDP will
grow by 1.1% in 2026, following last year’s 1.3%.
“Robust labour markets and real wage growth is
supporting household incomes,” it says. “However,
subdued consumer confidence, particularly in countries
such as France and Germany, is driving elevated savings
intentions, tempering growth in spending.”
But it says there are some encouraging signs for
improvement with increased investment in digital
infrastructure and the green energy transition. It also
expects more expansionary measures in 2027 including
increased spending on defence and infrastructure.
The independent Official Monetary and Financial
Institutions Forum (OMFIF) says there are reasons for
optimism for the Euro area in 2026, but with some
downside risks. It points to the fact that the European
Central Bank cut its deposit facilities rate in its first four
meetings in 2025 and that inflation is near its 2% target. It
also cites the fact that the ECB predicts Euro area GDP
will increase 1.2% in 2026. This is down on 2025’s 1.4%,
but up from the 1% the Bank projected in September.
“This upgrade reflects a loosening fiscal stance,
particularly from Germany with projected investment of
€127bn over 2026, as well as strong private consumption
and private sector investment, notably in artificial
intelligence,” says OMFIF, adding that another factor in
the ECB’s outlook revision is EU-funded investment in
southern European nations.
The downside risks include continued geopolitical
uncertainty, notably due to the war in Ukraine, plus a
resurgence in international trade tensions.
The Autumn Forecast from ECFIN, published November
17, says that EU economic growth ‘exceeded
expectations’ in 2025 at 1.4% and is forecast to remain at
this level in 2026, before rising to 1.7% in 2027. It
estimates 2025 Eurozone growth at 1.3% and predicts this
to slip to 1.2% in 2026, then increase to 1.4% in 2027.
Overall EU goods export growth is predicted to slow down
in 2026 due to the ‘high global tariffs’, but a rebound is
expected in 2027. At the same time, exports of services
are projected to continue growing robustly throughout the
forecast period.
EU goods imports are expected to follow a similar pattern
to goods exports but ‘grow at a more dynamic pace’.
“This high import growth is expected to be driven by trade
diversion caused by US tariffs on imports from third
countries,” says the ECFIN economic forecast. “China’s
relatively high share in US goods imports and the high
average tariffs it faces in the US mean that a large amount
of its exports could be redirected to other markets,
including the EU,” it states.
See - https://economy-finance.ec.europa.eu/economic-forecast-
and-surveys/economic-forecasts/autumn-2025-economic-
forecast-shows-continued-growth-despite-challenging-
environment_en
and
https://kpmg.com/uk/en/media/press-releases/2025/12/europe-
economic-growth-to-remain-modest.html#:~:text=language-
,Europe's%20economic%20growth%20to%20remain%20modest
%20in%202026%20amid%20persistent,Headwinds%20keep%20
Eurozone%20growth%20subdued.&text=The
and
https://www.omfif.org/2026/01/outlook-2026-european-capital-
markets-give-cause-for-optimism/
Euroconstruct forecasts construction uptick
Following two years of contraction, the European
construction industry is set for gradual recovery. That was
the conclusion of the of Euroconstruct’s 100th conference,
held in Paris late November and is the view expressed in
its Winter 2025 Summary and Country Reports. The
organisation says that Europe’s building sector is entering
a phase of ‘cautious stabilisation’.
Euroconstruct says Europe’s economic fundamentals
remain mixed. Although interest rates have come down
and inflation has moderated across Europe, construction
activity continues to face strong headwinds.
These, it says, include high building costs, affordability
constraints, subdued private investment and persistent
macroeconomic uncertainty.
“According to the latest November 2025 forecast from the
Euroconstruct network, total construction output across the
19 member countries declined by 0.5% in 2023 and by
1.7% in 2024, marking the weakest two-year performance
since the pandemic,” said Euroconstruct. “Yet the outlook
is shifting modest growth of +0.3% expected in 2025,
followed by a more noticeable expansion of +2.4% in
2026 as financing conditions ease and civil engineering
becomes the main engine of recovery.”
“These pressures weigh most heavily on building
construction, particularly the residential segment,” says
Euroconstruct. “Residential construction remains the
primary drag on overall growth. New residential output
dropped in 2023 and in 2024. A genuine rebound will
materialise only in 2027. Residential renovation also
softened in 2024 and is expected to decline again in 2025
before returning to modest growth in the following years.”
The non-residential sector is performing better.
Looking at prospects in construction in individual
countries, Euroconstruct says only Ireland, Poland,
Sweden, and the United Kingdom will the building sector
exceed 4% annualised growth between 2026 and 2028.
Among other major economies, it says Spain is expected
to achieve 3.0% growth, while France and Germany
remain subdued at 1.7% and 1.1%. Italy is forecast to
grow only 0.6%, despite a significant upward revision
from earlier expectations. Belgium with 0.5% growth
‘continues to face stagnation’.
Euroconstruct forecasts that Ireland will have Europe’s
fastest-growing construction market through 2028,
supported by strong public investment and resilient
demand.
See - https://www.euroconstruct.org/news/100th-euroconstruct-
conference/
and
https://www.euroconstruct.org/reports/
Spanish trade upbeat about 2026
The Spanish timber sector has positive prospects in 2026
according to the views expressed at latest meeting of the
Board of Directors of the Spanish Timber Trade
Association AEIM.
At the meeting in Madrid on December 10, the Directors
took part in an online survey to gauge their opinion on
trade development in 2025 and the outlook for next year.
The outcome said AEIM provides a barometer for trading
conditions and prospects. Broadly, said AEIM the result
points to a ‘landscape of stability and growth’.
On sales through 2025, 50% of survey participants
reported similar levels to the previous year, while 42% had
seen growth.
“Also noteworthy is the increase in requests for quotes and
inquiries for 58% of companies, which indicates growing
commercial activity,” said AEIM
As far as supply trends, delivery disruption was mostly
concentrated in tropical timber, with 33% of survey
respondents reporting issues with Africa, with 25%
experiencing some problems with Nordic and Central
European softwoods (25%). In contrast, supply of boards,
including particleboard, MDF, and plywood, was reported
stable in 2025.
The outlook for 2026 is quite upbeat. Half of survey
participant companies anticipate rising up to 10%, and
17% expect even stronger growth. Furthermore, 83% of
participants are planning investment projects.
Environmental issues and legislation, notably the EU
Timber Regulation and EU Deforestation Regulation
(EUDR) are another vital focus for AEIM. It is keeping
members up to speed on the ongoing development of
EUDR Due Diligence Guidelines and on the implications
of the EUDR overall. It’s work informing members of the
impacts of CITES regulation development were also
discussed at the meeting.
Thanks to its active participation with the CEOE and
ETTF, AEIM advocates to the Spanish and EU
government , communicating the timber sector’s needs,
pressing for fair competition and rigorous scrutiny
legislation affecting the industry.
“We conclude the year with a sector demonstrating
strength, investment dynamism, and looking at favourable
prospects for 2026, while reaffirming the strategic
importance of wood in the ecological transition and
sustainable construction,” said AEIM.
See - https://www.aeim.org/index.php/2025/12/11/aeim-2026/
and
https://www.aeim.org/index.php/2025/12/16/aeim-barometro-
diciembre25/
New force in French timber trade
France has a new business organisation bringing together
the timber trade and the wood construction sector. The
Union des Industries de la Construction et Commerce du
Bois (UICCB – Union of Construction Industries and
Timber Trade) has been formed by Le Commerce du Bois
(LCB) joining forces with the Union des Industriels et
Constructeurs Bois (UICB).
The document launching what is billed as a ‘major new
player’ in the timber sector was signed by the president of
the UICB Frédéric Carteret and president of the LCB
François Laresche on December 11.
“The synergies from the merger of these two major players
in the French forestry and timber sector will benefit the
development of companies in the sector, which are
naturally committed to decarbonizing the construction
process,” says the official statement on the creation of the
UICCB.
The new organisation is the result of a year of discussions
between the business leaders of the UICB and LCB and
followed the two bodies holding a joint extraordinary
general assembly where their elected officers ratified the
merger.
The move, says the UICCB, will ‘increase the visibility
and influence of their member companies and enable them
to acquire a stronger position within the emerging forestry
and timber industry’.
“This alliance between manufacturers of wood products
and systems, timber construction companies, suppliers of
French, Nordic, and exotic timber, and professionals in
trade and distribution establishes a new organization that
encompasses the entire value chain, from the resource to
the finished product. With this ecosystem of
complementary professions, the UICCB now stands as the
only independent professional organization dedicated to
the development of timber construction throughout
France.”
UICCB President Mr Carteret said the creation of the
UICCB marks a turning point for the French forestry and
timber sector. “[It consolidates] existing synergies
between companies in an economic sector at the heart of
our country's environmental transition,” he said.
“Together, we are growing the timber of tomorrow ”.
See: https://www.uicb.pro/luiccb-un-nouvel-acteur-de-poids-
pour-la-filiere-foret-bois-francaise/
EUDR simplification
With the publication on 23 of December of an amending
regulation in the Official Journal of the EU,
implementation of the EU Deforestation Regulation
(EUDR) is pushed back a further year. Obligations on EU
businesses trading in EUDR in-scope commodities
(including timber) are also changing. Those of small and
micro-businesses in particular are significantly simplified.
European timber trade bodies have welcomed the EU’s
action. In October 2025 a number had joined organisations
representing other affected commodity sectors in signing
an ‘open statement’ urging politicians to ‘stop the clock’
on the EUDR and push implementation back.
They included the European Timber Trade Federation, the
CEI-Bois Confederation of European Woodworking
Industries, the European Organisation of Sawmill
Industries, European Panel Federation and European
Parquet Federation.
A key consideration behind the amending regulation was
the administrative burden the EUDR would have imposed
on companies in its original form, notably smaller firms.
Another was the capacity of the ‘Traces’ information
system, to which affected businesses will upload
compliance data.
On the latter, the amendment regulation states that ‘most
recent projections on the number of expected operations
and interactions in the information system have led to a
substantial reassessment of the load on the system,
indicating much higher traffic than anticipated.”
Regarding the burden on businesses of compliance, it
points to a 2024 report titled “The future of European
competitiveness”.
“This indicated that the increasing number and complexity
of rules is limiting room for manoeuvre for EU businesses
and preventing them from remaining competitive,” states
the amending regulation. “Concerns about the complexity
of rules have also been reported by trade partners. Against
that background, certain procedures and requirements laid
down in the EUDR ((EU) 2023/1115) should be simplified
and unnecessary regulatory burdens for businesses should
be removed, while maintaining [EUDR] objectives.”
The EUDR amended regulation consequently introduces a
new sub-category of in scope businesses that place
affected commodities on the EU market called ‘micro or
small primary operators’. Such businesses, it says, should
only have to submit a ‘one-time simplified declaration’ in
the information system. They would then be issued with a
‘declaration identifier’ to accompany relevant products
they place on or export from the EU market.
EUDR changes in summary
Enforcement of the EUDR for large and medium-
sized in-scope first placing operators will start on
December 30, 2026 and June 30, 2027, for micro
and small primary operators.
Only operators first placing products on the
market will have to submit due diligence
statements to the EUDR information system.
Only first downstream operators will have to
keep and pass on the reference number of the
initial due diligence statement.
Micro and small primary operators will be able
submit a one-off simplified declaration to the
EUDR information system.
Micro and small primary operators will have the
option to replace geolocation information for the
source of goods with the postal address of the
plot of land or establishment where they
originated.
The definition of micro and small primary
operators will be broadened.
See - https://eur-lex.europa.eu/legal-
content/EN/TXT/HTML/?uri=OJ:L_202502650
and
https://fefac.eu/newsroom/news/open-statement-a-call-to-stop-
the-clock-and-ensure-a-workable-eu-deforestation-regulation/
and
https://sustainablefutures.linklaters.com/post/102ly55/eu-
changes-to-deforestation-regulation-reach-the-finish-line
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