Europe is growing again, but the weaker dollar looms as a threat

"Moderate growth has defied recession fears from earlier in the year, when U.S. President Donald Trump threatened to raise tariffs to levels that could have devastated trade. Talks settled on a 15% cap on U.S. tariffs, or import taxes, on goods from the European Union. The higher tax isn't great for business - but the certainty resulting from the deal let companies at least go ahead and plan."

"The latest threat is the dollar's steep fall against the euro. It is at its weakest for 4 1/2 years, which makes European exports less competitive on price in a key foreign market. The dollar has weakened due to fears that Trump's tariffs will slow growth and that his attacks on U.S. Federal Reserve Chair Jerome Powell will undermine the U.S. central bank's role as an inflation fighter and protector of the dollar's worth. The euro has risen"

The euro area expanded by 0.3% in the last quarter of 2025, matching the prior quarter and rising 1.3% from a year earlier. Moderate growth overcame earlier recession fears after U.S. tariff talks produced a 15% cap, which provided planning certainty despite higher taxes. Services activity showed moderate gains per S&P Global purchasing managers, while exports fell then improved toward year-end. Inflation slowed to 1.9% in December and rising wages increased consumer purchasing power. A steep fall in the dollar pushed the euro to a 4½-year high, threatening export competitiveness as a stronger euro makes European goods more expensive abroad.

Read at Fast Company