UBS Cuts Eurozone Growth Forecasts by 0.5pp

UBS lowered Eurozone 2026 GDP forecast to 0.8% (down 0.5 percentage points) and 2027 to 1.2% (down 0.2pp), citing Iran conflict risks.
Germany’s 2026 growth forecast was halved to 0.6%, Italy cut to 0.5%, France trimmed to 0.9%, while Spain fell only 0.1pp to 2.2%.
Eurozone HICP inflation rose to 2.5% YoY in March, UBS expects 3% in April, a May peak of 3.4%, and a 2026 average of 2.8%.
Fiscal support stays under 0.5% of GDP, with Italy’s excise tax cut and Spain’s VAT electricity reduction adding at most 10‑20 basis points to growth.