A Path to Inclusive Growth in the EU amid Inflation and Fiscal Constraints (Part 1)

Following an unprecedented tightening cycle that avoided deep recession and widespread job losses, the EU economy appears poised for a "soft landing" with inflation nearing target levels. In 2023, EU growth slowed to an average of 0.4 percent amid a significant decline in trade, while employment showed signs of recovery in 2024, albeit with disparities across sectors and regions. Despite easing inflation, high prices continue to strain the poorest, exacerbating poverty and food insecurity, particularly in Bulgaria, Croatia, Poland, and Romania. Employment remains crucial for poverty alleviation, yet less skilled and blue-collar workers struggle to recover from recent shocks. The report highlights the need for targeted policies to support vulnerable groups and ensure broader economic inclusion. Fiscal consolidation is expected to gain momentum under the EU's revamped Economic Governance Framework, balancing fiscal sustainability with inclusive growth amidst geopolitical and social pressures