Eurozone economy stagnated at end of 2024 according to new data
The eurozone economy did not grow in the final three months of 2024, adding weight to the argument that the European Central Bank will ease interest rates further this year.
Eurozone GDP growth came in at 0% quarter-on-quarter for the fourth quarter of 2024, according to the European Commission. That was a steep drop from the 0.4% growth rate in the previous quarter.
It was also unexpected: a poll of economists by Reuters found that the consensus expectation was for growth of 0.1%.
Key events
If the European Central Bank does not cut interest rates this afternoon it would count as a real shock.
The eurozone economy is already struggling, and the prospect of US tariffs further hitting growth is adding to worries for politicans and central bankers.
Neil Birrell, chief investment officer at Premier Miton Investors, said:
Eurozone GDP stagnated in the fourth quarter, yet again showing that the economy is in need of some stimulus. It’s a tough outlook globally at present and uncertainty over White House policy measures aren’t helping. The political issues in Germany and France are adding to the strain, creating a cocktail that is making it difficult for businesses and consumers alike. The ECB will no doubt step up the plate to help out.
The euro has edged down today, with most of the movement coming at 9am after the weaker-than-expected German GDP reading.
But it has not been a dramatic shift: the euro is down 0.1% against the US dollar at $1.04. Traders will wait for Christine Lagarde’s comments at the European Central Bank press conference this afternoon.
Against the pound the euro has fallen by 0.2%. A pound buys €1.20.
It was a flash reading on the Eurozone economy, so we don’t have the details on what the drivers were. But it’s clear that it was a weak end to 2024.
But the European Central Bank might be able to spur a bit of economic growth in the eurozone with looser monetary policy.
Charlie Cornes, senior economist at the Centre for Economics and Business Research, a consultancy, said:
This marks a weak end to last year, following positive growth in the first three quarters of 2024. As a result, first estimates suggest that the currency bloc as a whole grew by 0.7% in 2024. Declining activity in Germany – the Eurozone’s largest economy – has weighed on the bloc’s growth, with German GDP contracting by 0.2% on the quarter. This suggests Germany has now seen annual declines in activity for two consecutive years.
In 2025, further loosening of monetary conditions is expected to provide a modest uptick in activity for both Germany and the Eurozone, with growth expected to amount to 0.3% and 1.0% respectively.
UK oilfield approvals ruled unlawful on climate grounds
Matthew Taylor
The oil platform Stena Spey is moved with tugboats amongst other rigs that have been left in the Cromarty Firth near Invergordon in the Highlands of Scotland. A judge has upheld a legal challenge by environmental campaigners against the decision to grant consent to two new oil and gas fields in the North Sea. Photograph: Andrew Milligan/PA
The decision to greenlight a giant new oilfield off Shetland has been ruled unlawful by the courts in a major win for environmental campaigners.
The proposed Rosebank development – the UK’s biggest untapped oilfield, due to be developed by Norwegian oil company Equinor – had been given the go-ahead in 2023 under the previous government.
But on Thursday the court of session in Edinburgh sided with campaigners and climate experts in ruling that the original decisions to permit Rosebank and a second, smaller, gas field called Jackdaw were unlawful, as they had not taken into account the carbon emissions created by burning any oil and gas produced. British oil company Shell is due to develop Jackdaw.
Tessa Khan, from the campaign group Uplift which has been at the forefront of the campaign to stop Rosebank, said the court ruling was a significant milestone. “This … means that Rosebank cannot go ahead without accounting for its enormous climate harm,” she said.
A spokesperson for Equinor said it welcomed the judgment, which allows it to continue preparation work on the Rosebank field although it prohibits any drilling.
They said the project would bring investment and jobs to the UK, adding: “We will continue to work closely with the regulators and DESNZ to progress the Rosebank project.”
A spokesperson for Shell, the company behind the Jackdaw field, also welcomed the decision, saying it allowed its preparatory work to continue “while new consents are sought. Swift action is needed from the government so that we and other North Sea operators can make decisions about vital UK energy infrastructure.”
They added that if Jackdaw went ahead it would provide “enough fuel to heat 1.4m UK homes, at a time when older gas fields are reaching the end of their production and the UK is reliant on imported gas to meet its energy needs.”
Eurozone economy stagnated at end of 2024 according to new data
The eurozone economy did not grow in the final three months of 2024, adding weight to the argument that the European Central Bank will ease interest rates further this year.
Eurozone GDP growth came in at 0% quarter-on-quarter for the fourth quarter of 2024, according to the European Commission. That was a steep drop from the 0.4% growth rate in the previous quarter.
It was also unexpected: a poll of economists by Reuters found that the consensus expectation was for growth of 0.1%.
Germany has now gone two consecutive years with a shrinking economy.
The only reason that it has not been called a “recession” so far is that by convention that word applies to two consecutive quarters of contraction. As the below quarterly GDP chart from Trading Economics shows, the country has narrowly avoided that fate over the last nine quarters.
Germany’s economy has flirted with recession for more than two years Photograph: Trading Economics
The economy has spent the last two years narrowly avoiding the “recession” word, but that will not be much comfort to its citizens – or to chancellor Olaf Scholz as he tries to retain his position at the German elections on 23 February.
The GDP data today show that the German economy shrank by 0.2% year-on-year in 2024, after shrinking by 0.3% in 2023.
It’s the first time since the early 2000s that the German economy contracted for two consecutive years, according to Carsten Brzeski, global head of macro at ING, an investment bank. He wrote:
The German economy has now been stuck between cyclical and structural headwinds for several years, and 2024 was finally the year that many politicians realised that the old macro business model of cheap energy and easily accessible large export markets was no longer working.
Ten years of underinvesting, deteriorating competitiveness and China’s shift from an export destination to a fierce industrial competitor have taken – and will continue to take – their toll on the German economy. Contrary to the early 2000s when Germany’s economic “sickness” or problem was high unemployment and a rigid labour market, the current problems are much more diverse and hence even more difficult to solve than they were 20 years ago.
Let’s also not forget that the external environment in the early 2000s was far more favourable for Germany, with China’s entry into the World Trade Organization and the EU’s enlargement. This contrasts sharply with today’s geopolitical tensions, a nearby war, and the rise of protectionism.
German economy contracted more than expected at end of 2024
Germany’s economy contracted by more than expected in the fourth quarter of 2024, according to data that suggest the Eurozone economy as a whole may not have expanded.
Germany’s GDP dropped by 0.2% quarter-on-quarter in the last three months of the year, according to preliminary data from the statistics office. That was worse than the 0.1% contraction expected by economists polled by Reuters.
France’s economy shrank by 0.1% in the quarter, while Italy’s economy also recorded zero growth.
The figures underline the rationale for interest rate cuts from the European Central Bank later today.
Andrew Kenningham, chief Europe economist at Capital Economics, a consultancy, said:
With national data now available for all larger euro-zone countries, it looks as if GDP growth in the region slowed to 0.1% q/q or even zero in Q4 last year. The region’s two largest economies both contracted and Italy recorded no growth. With the major economies set to remain lacklustre this year even if a major tariff war is avoided, we expect the ECB to cut its deposit rate by 150bp this year to 1.50%, starting with 25bp later today.
Open AI and SoftBank reportedly in talks over $25bn investment
US President Donald Trump speaks in the Roosevelt Room beside (from second left to right) Larry Ellison, executive charmain of Oracle, Masayoshi Son , chief executive of SoftBank Group, and Sam Altman, chief executive of OpenAI. Photograph: Jim Watson/AFP/Getty Images
One of the driving forces of market gyrations this week has been concerns over the emergence of DeepSeek, a Chinese artificial intelligence company that appears to have blown rivals out of the water with an AI model that used a fraction of the resources of others.
That threatened to undermine the narrative of ever-increasing use of resources – particularly computing power – that had fuelled the AI boom. Chip maker Nvidia’s share price duly plummeted on Monday in the biggest one-day fall in notional value in stock market history.
There has been a notable round of briefing since then from the US competitors led by OpenAI as they try to reassure investors. The latest news reported by the Financial Times, with very helpful timing, is that Japanese investor SoftBank is in talks to invest as much as $25bn in OpenAI.
Owners of the data used by the American company to train its model may be forgiven for at least one eyebrow hitting the ceiling at that complaint. OpenAI has argued in submissions to the UK’s House of Lords that it would be impossible for its technology to exist without training on copyrighted material – without the consent of the owners of that material. Tech website Gizmodo wrote: “OpenAI Claims DeepSeek Plagiarized Its Plagiarism Machine”.
Germany’s Dax stock market index is also in on the party with a new record high, while Spain’s Ibex benchmark is at its highest since 2008, before the Eurozone crisis crunched its economy for a decade.
Spain’s stock market has risen strongly in the last couple of years, as the country has become the surprise leader of the European economy – with a growth rate far outstripping the EU’s largest economy, Germany.
However, the stock market has a long way to go before it surpasses that level, pumped up by the country’s housing bubble.
Spain’s stock market has hit its highest since 2008. Photograph: Refinitiv
The biggest gainer on the FTSE 100 is telecoms company Airtel Africa. Its share price rose 7.2% after it reported a 20% increase in revenues for the first nine months of its financial year.
It is vying with St James’s Place, after the wealth manager enjoyed stronger inflows. Reuters reported:
Posts record funds under management of £190.21bn at 2024-end, above analysts’ views of £187.4bn, according to company-compiled consensus.
European stocks hit new record high
It has started off as a fairly mild trading day across European stock markets. All the major indices have gained ground in early trading. But that has still pushed the Euro Stoxx 600 index to its latest record high.
The Stoxx 600 reached 535.9 points on Thursday morning. It has risen from below 500 in mid-December as investors expect the European Central Bank to act to support the economy.
The FTSE 100 is up by 0.1%, or eight points, at 8,566.3. That leaves it 20 points short of its all-time high of 8,586.68 from a week ago. Could the ECB also help it to a new record later?
European stock markets gained ground on Thursday morning. Photograph: Refinitiv
Royal Mail to deliver on alternate days; Shell profits down
Good morning, and welcome to our live coverage of business, economics and financial markets.
Royal Mail is set to be allowed to deliver second-class letters only on alternate weekdays and not on Saturdays after the industry regulator announced a shake-up of postal service rules.
Communications regulator Ofcom has proposed that Royal Mail would still be required to deliver first-class letters six days a week and the price cap on second-class stamps would remain, but the company will be allowed to make cost savings by cutting the number of days it goes to every address.
The changes could save Royal Mail between £250m and £425m each year. The cuts would be a boon to Czech billionaire Daniel Křetínský’s EP Group, as it nears a £3.6bn takeover of Royal Mail’s FTSE 250-listed parent company, International Distribution Services.
Shell profits fall, but investor payouts rise
Shell has handed its investors a multibillion-dollar windfall despite reporting weaker than expected profits of $23.7bn for last year as global oil and gas prices tumbled.
Shareholders of Europe’s biggest oil company are in line for a 4% dividend hike alongside share buybacks of $3.5bn for the last three months of the year.
This marks the thirteenth consecutive quarter in which Shell has handed its investors buy backs of more than $3bn, despite falling earnings from its oil and gas.
European Central Bank expected to cut interest rates
The European Central Bank, led by Christine Lagarde, is widely expected to cut interest rates today in an effort to support economic growth.
We will get a good picture of the economy’s momentum this morning, with Eurozone GDP figures.
Reuters reported:
The European Central Bank is all but certain to cut interest rates on Thursday and is likely to keep open the door to further policy easing as concerns over lacklustre economic growth supersede worries about persistent inflation.
The EU Commission set out a major initiative Wednesday to strengthen EU competitiveness by boosting innovation and investment, securing access to raw materials
The EU executive has announced “an unprecedented simplification effort” to cut red tape and boost innovation in an attempt to reverse Europe’s economic de
