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The latest Autumn 2025 Economic Forecast from the European Commission points to a remarkable surge in Ireland’s economic performance next year. Gross domestic product is expected to expand by 10.7 percent in 2025, driven primarily by strong export activity recorded during the first half of the year.

This sharp rise is expected to be short lived. As the early export gains fade, GDP growth is projected to ease significantly to 0.2 percent in 2026 due to technical base effects, before settling at a more steady 2.9 percent in 2027. The Commission also anticipates contained inflation and further improvements in labour market conditions during the period.

Although the outlook for Ireland’s public finances remains positive overall, the report highlights ongoing risks linked to corporation tax receipts. These receipts have been a substantial contributor to the Exchequer in recent years but remain highly concentrated within a small number of multinational firms.

At a wider European level, the Commission projects stronger growth for the euro zone than previously expected. GDP across the 20 member states using the single currency is forecast to expand by 1.3 percent in 2025, compared with the 0.9 percent estimate issued last spring. This performance is attributed in part to a surge in exports ahead of anticipated tariff rises.

Growth across the euro zone is then expected to moderate slightly to 1.2 percent in 2026 before increasing again to 1.4 percent in 2027. According to the forecast, consumer price inflation across the bloc is moving closer to the European Central Bank’s target, supported by improving financing conditions.

Despite improved growth expectations, public finances across the euro zone are expected to deteriorate. The collective budget deficit is forecast to rise from 3.1 percent of GDP in 2024 to 3.2 percent in 2025, reaching 3.4 percent in 2027. Public debt is also projected to climb, rising from 88.1 percent of GDP in 2024 to more than 90 percent by 2027.

Within individual member states, Germany is expected to record a larger deficit next year due to increased defence expenditure, while France is forecast to slightly reduce its budget gap despite ongoing political challenges.

Disclaimer: This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.