The European economy is going to have a tough few years, if new forecasts are correct. Despite the European Central Bank (ECB) cutting interest rates for the third time in a row on Thursday, saying that lowering inflation was “well on track”, the outlook for growth is less rosy. “The element which has changed is the downside risks, particularly the downside risk to growth,” ECB president Christine Lagarde said as she announced a further cut in interest rates in the bloc, down to 3%. The bank said surveys indicated growth was slowing in the current quarter and that the recovery depended on consumers spending more and businesses increasing their investments. It cut its forecast for growth for the eurozone economy next year to 1.1%, from the 1.3% it had expected in September. And these forecasts do not include the impact of the Trump tariffs on trade that are on the horizon, after the US president-elect’s inauguration in January. Markets now anticipate a faster series of rate cuts next year.
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