Refresh this chart in your browser | Edit the chart in Datastream Europe’s sluggish economic performance relative to the US is sometimes blamed on its relatively expensive energy. That, in turn, is sometimes blamed on its efforts to decarbonise. But despite the growing share of renewables on Europe’s grid, it is gas prices that typically set the price of its electricity thanks to a marginal pricing system; and gas prices are about four times as high in Europe as they are in the US. There are several reasons for this. It is true that Europe has higher carbon taxes than the US,

As Spring 2025 unfolds, Europe finds itself at a potential turning point. Following prolonged stagnation and inflationary pressure, and amid a backdrop of escalating tariff tensions, a cautiously optimistic tone is beginning to emerge across macroeconomic indicators, financial markets and investor sentiment. This note brings together developments across key areas — economic data, inflation dynamics, market behaviour and geopolitical risk — to provide a coherent snapshot of Europe’s evolving outlook. Refresh this chart in your browser | Edit the chart in Datastream Euro area economies are gradually emerging from the stagnation that defined much of 2024. Recent improvements in industrial production and

One of the defining features of the past few years has been the continued rise of the US tech giants. In 2025, however, momentum in innovation appears to have started to shift towards the other side of the Pacific. Chinese technology firms, long viewed as playing catch-up, are now emerging as contenders in the global AI race. Leading this surge is DeepSeek, a Chinese startup that, on 24 January 2025, unveiled its R1 large-language model — reportedly developed at a fraction of the cost of similar models from US counterparts. Despite its modest budget, R1 is said to perform competitively,

Over the past decade the trend of hyper-globalisation, which has been one of the defining characteristics of economic growth, has started to wane. More recent changes to the global political climate have further threatened free trade, with the Trump administration is looking set to drive into place a slew of protectionist measures. In light of this backdrop, two other global economic powers, India and the European Union (EU), are increasingly keen to finalise a free-trade agreement (FTA) by the end of the year. It is clear to see why both parties are keen to engage in a free-trade agreement, with

The European cement sector has had a strong start to 2025 compared to its US equivalent. As the chart shows, European cement stocks have been outperforming the broader euro area market since January 2023; but this year’s growth has been particularly strong, with the Datastream euro area cement index climbing around 45% since January to reach a new all-time high on 14 March — while its US counterpart has only registered 3% growth in the same period. As a result, the total market value of the US cement index relative to the euro area cement index has shrunk, falling from

The list lengthens as President Trump reiterated his intent for India to join the likes of Canada and Mexico, with plans to raise US tariffs by 2 April. India has traditionally been more of a closed economy and maintained tariff rates above global norms, imposing a mean average 14.36% rate in 2022 — much higher than the average tariff imposed by the US of 2.7%. Mr Trump aims to address this imbalance. Refresh this chart in your browser | Edit the chart in Datastream India is forecast, by the IMF, to become the world’s third largest economy by 2028 (when measured at

Faced with uncertainty over the new administration’s tariff policy, US stock markets are weakening. As outlined in Fathom’s Global Outlook, Spring 2025, European economies could also be hit hard due to American tariffs. However, despite this lingering threat, mid-to-large cap German stocks have outperformed (as have small caps, albeit to a lesser extent). Most recently, discussions of loosening a long-held ‘debt brake’ to boost defence and infrastructure spending has further supported financial markets in Germany. Across the Atlantic, tariffs on Canada, Mexico and China have resulted in a sharp decline in US stocks, as threats of a trade war and

More than three years have passed since the outbreak of war between Ukraine and Russia. However, following the inauguration of Donald Trump in January, and subsequent dialogue between the United States and Russia, there has been talk of a potential peace settlement. But the recent meeting between Mr Trump and Ukrainian’s president, Volodymyr Zelensky did not go well, leading to uncertainty regarding the continuation of US military and financial support for Ukraine. Europe has stated its intention to step up its assistance in response, but what that may look like remains unclear. A peace deal still seems to be the

The uplift seen in UK rent inflation data may help to explain recent rises in overall inflation numbers. Rent represents one of a number of slow-moving drivers — others include rail fares, water, and council tax bills. The ONS inflation numbers record the price of the stock of rental properties, but with tenancy contracts typically reset only once a year, it takes time for new market rates to surface. Hence, with an 8% weighting attached to rent price in the CPI, and 35% of UK households renting in 2023-24, such lagged indicators may explain continued above-target inflation in the short

Over a month has passed since Donald Trump was inaugurated in Washington DC. In that time, he has moved swiftly to start implementing several of his promised policies, including preparations to impose broad tariffs, reductions in the federal workforce and the initiation of peace talks regarding the war in Ukraine. While the long-term effects of these actions remain uncertain, key trends in financial markets have already begun to reveal how investors are reacting to his policy decisions. The US dollar surged following Trump’s election victory on 5 November last year, reaching its peak in early January. However, since his inauguration

European defence stocks have had a strong start to the year, with the Datastream euro area defence index climbing roughly 25% since President Trump’s inauguration in January. Both euro area and US defence stocks have outperformed their broader markets since the onset of the Russia-Ukraine conflict in 2022, but the euro area’s outperformance has accelerated amid the new president’s repeated calls for Europe to take greater responsibility for its own security. Mr Trump has told European NATO members they should raise defence spending to 5% of GDP, up from the current 2% target (which many European nations fall short of).

Germany’s snap election on Sunday, 23 February, has come against a backdrop of economic malaise in Europe’s largest economy. Patience with the incumbent Chancellor, Olaf Scholz, of the Social Democratic Party, had grown thin after two consecutive years of negative GDP growth. Mr Scholz said his hands had been tied by the German ‘debt brake’, a rule inserted into the German constitution by Angela Merkel in 2009 which limits the annual deficit of the federal government to 0.35% of GDP. But Mr Scholz’s political rival Friedrich Merz, the leader of Mrs Merkel’s former party the Christian Democratic Union and Christian