At first glance, the latest economic forecasts for 2026 may not appear particularly promising. Growth across Europe is set to remain modest – around 1.3% for the EU, 1.1% for the Euro area and 1.2% in the United Kingdom¹ – so it is unsurprising that both consumers and businesses remain cautious.
Yet a deeper look at the fundamentals reveals a more nuanced picture; one that suggests Europe is not as fragile as the topline numbers imply. When we consider demographic trends, labour force dynamics, productivity growth and recent investment levels, current projections sit only a few tenths below Europe’s long term growth trajectory. In other words, while growth may be lukewarm, there is still reason for optimism.
The continent has absorbed an extraordinary sequence of shocks over the past five years, from a global pandemic and war to a cost-of-living crisis, rising geopolitical tensions and shifting trade dynamics. It is no wonder that many consumers remain cautious. Yet beneath this caution lies a foundation of resilience: labour markets have held firm; wage growth has remained solid; inflation has eased, restoring purchasing power; and interest rates are gradually declining, improving credit conditions. Together, these trends suggest consumers may be in better shape than sentiment alone would indicate.
In 2026, this tension between caution and underlying strength will define Europe’s economic story. Consumers are spending, but with restraint. Many households continue to build up savings even as incomes improve. Merchants, too, remain alert to ongoing risks, from macroeconomic uncertainty to evolving fraud threats.
Still, there are bright spots, such as the continued expansion of digital payments and ecommerce across European markets; new momentum behind AI driven commerce and consumer experiences; and early signs that discretionary spending may begin to recover as confidence stabilises. Together, these forces create meaningful potential for upside surprises.
Europe has weathered extraordinary shocks, and its underlying resilience now positions it for gradual, steady strengthening. If confidence improves, the region could see a resurgence fuelled not by exuberance but by the steady release of pent-up spending power from households that have endured years of uncertainty and are ready to reengage.
2026 may not be a year of booming growth but it could mark the beginning of Europe’s economic renewal: quiet, steady and stronger than it first appears.
Read the full Europe 2026 Economic Outlook report here.
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¹Visa Business and Economic Insights, European 2026 Economic Outlook, January 2026