EC spring forecast Reeling from the renewed energy shock

Research evidence excerpt

EC spring forecast Reeling from the renewed energy shock

21 May 2026

EC spring forecast Economics

Reeling from the renewed energy shock

◆ The European Commission expects eurozone growth to slow markedly and Anja Sabine Heimann

inflation to increase given the renewed energy shock Economist,ScandinaviaGermany &

HSBC Bank plc

◆ Energy support measures add new burdens on strained public finances anja.sabine.heimann@hsbc.com +44 7387 247457

◆ The sharp deficit rise in France in 2027 (to 5.7% of GDP) stands out, as does Bethan Ellis

Global Economist

Germany’s structural deficit (although we are sceptical on the latter) HSBC Bank plc

bethan.ellis@hsbc.com

+44 20 7991 6714

Facts

The European Commission has released its spring forecast, with updated economic and fiscal projections

– this forms the basis for the EC’s assessment of Member States’ compliance with EU fiscal rules to be

published in mid to late June.

Growth down, inflation up

Unsurprisingly, given the fall-out from the Middle East conflict, growth is forecast lower in 2026 for the

eurozone, at 0.9% compared to 1.2% in 2026. This is still stronger than our 2026 own forecast, of 0.5%

(see Eurozone forecast update: A ‘bad’ baseline, 12 May 2026). The EC has also lowered its growth

expectations for 2027 to 1.2%, down from 1.4% (HSBC: 0.7%). The downgrades for 2026 were broad-

based across countries, with only Spain and Poland predicted to have equal or higher growth than back in

the Autumn. Germany saw one of the larger downgrades (-0.6ppts) and is expected to grow just 0.6% this

year. France, meanwhile, is expected to grow at 0.8% (HSBC: 0.6%), only a slight slowdown from

expectations last Autumn of 0.9%.

Inflation, meanwhile, is forecast higher for the eurozone – the new projections show inflation at 3.0% in