Western European 2H26 outlook: Our 10 calls

Research evidence excerpt

Western European 2H26 outlook: Our 10 calls

Greg Fuzesi (44-20) 7134-8310 Raphael Brun-Aguerre (33-1) 8703 2409 Europe Economic Research J P M O R G A Ngreg.x.fuzesi@jpmorgan.com raphael.x.brun-aguerre@jpmorgan.com

J.P. Morgan Securities plc J.P. Morgan Securities plc 10 July 2026

Allan Monks (44-20) 7134-8309 Mariana Monteiro (44 20) 3493-5147

allan.j.monks@jpmorgan.com mariana.reispaivamonteiro@jpmorgan.co

J.P. Morgan Securities plc m

J.P. Morgan Securities plc

Western European 2H26 1. Resilience sets up cyclical lift

outlook: Our 10 calls One widespread perception is that especially the Euro area economy is structurally weak, and that the ECB’s hawkish-

ness does not help. We have argued that this concern is over-

• Growth in the region has not been exciting but it has stated. On an ex-Ireland basis, the Euro area economy has been resilient to shocks and is set to improve in 2H26

grown at potential over the past two years despite large geo-

• Inflation is high, with underlying stickiness now affect- political shocks, domestic demand has been the key driver,

ing the Euro area as well supply side performance has improved to trend and income

• All four central banks to hike rates once more in 2H generation between households and corporates has become

more balanced (Table 1). The UK, Sweden and Norway have

• Political pressures will rise but not boil over, while EU also grown at or above trend since 2024 and our forecast now

poilcy takes steps to address key challenges

only has a modest and temporary slowing in the Euro area in

Coming into this year, we had a constructive outlook for the 2Q26 to 0.5%q/q saar. Lower energy prices and improving

Western European economies. Trade war fears were receding sentiment should lead to some cyclical lift in 2H26, especially