Brussels – The EU economy continues its moderate expansion with stable GDP growth, although accompanied by an increase in both bankruptcy filings and new business registrations. This growth follows a quarter marked by an increase in greenhouse gas emissions and gross public debt.
Looking at the monthly business indicators released by Eurostat, while industrial production decreased compared to the previous month, retail trade and the production of services both increased, the latter reaching an all-time high.
The economic climate also improved, mainly due to higher confidence in industry, services and retail trade. However, it remains below its long-term average.
GDP maintains its moderate pace of growth
In the second quarter of 2025, the EU economy continued to grow at a positive pace, with a moderate 0.2 % GDP increase compared to the previous quarter, according to Eurostat’s flash estimates. The steady quarterly expansion contributed to a 1.5% year-on-year increase in GDP in Q2 2025.
Among the four largest EU economies, Spain continued to lead growth with a 0.7 % increase in GDP in Q2 2025 compared to the previous quarter. France followed with a 0.3 per cent moderate growth, while Germany and Italy both recorded a GDP contraction of 0.1 per cent in Q2 2025 compared to the previous quarter.
Increasing greenhouse gas emissions
In the first quarter of 2025 in the EU, total greenhouse emissions increased by 3.4 per cent compared to the same quarter of the previous year, marking the second consecutive year-on-year increase for quarterly data. Emissions were estimated at 1.99 t/capita (tonnes per capita) in the first quarter of 2025, slightly higher than the 1.98 t/capita in the fourth quarter of 2025. This increase contrasts with the usual pattern of slight quarterly declines at the beginning of previous years, recording the first quarter-on-quarter increase since Q1 2021. The main economic sectors contributing to total greenhouse gas emissions were households (25.5%), electricity and gas supply (19.3%) and manufacturing (18.6%).
In the first quarter of 2025, emissions varied widely among Member States, with the highest levels recorded in Luxembourg (3.4 t/capita), Ireland (3.3 t/capita), and Denmark (3.2 t/capita). In contrast, Sweden (1.2 t/capita), Portugal (1.3 t/capita), and Croatia (1.4 t/capita) recorded the lowest emissions per capita.
Both bankruptcies and new business registrations increase
In the second quarter of 2025, bankruptcy declarations in the EU increased by 1.7% compared to the previous quarter, after a decline of 0.3% in the first quarter of 2025. This confirms the upward trend seen since 2021. At the same time, the number of new business registrations also increased by 4.6% quarter-on-quarter in Q2 2025, almost offsetting the decline recorded in Q1 2025.
Among the Member States for which data are available, the highest increases in bankruptcy filings on a quarterly basis in Q2 2025 were observed in Latvia (70.7%)
[1],
Cyprus (66.8%), and Slovakia (20.1%), while the sharpest declines were recorded in Estonia (-28.7%), Spain (-8.3%) and Sweden (-8.1%).
Slump in industrial production
EU industrial production decreased by 1.0% on a monthly basis in June 2025, back below the April level. However, year-on-year growth compared to June 2024 remained positive at 0.5 %.
At Member State level, the largest monthly increase in June 2025 was recorded in Belgium (5.1%), followed by France, Sweden (both 3.8%) and Greece (3.3%). By contrast, the sharpest declines were recorded in Ireland (-11.3%), Portugal (-3.6%) and Lithuania (-2.8%).
Retail expansion
After a slight decline in the previous month, the volume of retail trade in the EU recovered with an increase of 0.3%, partly offsetting the decline in May. Moreover, on a year-on-year basis, retail trade grew by 3.1% in June 2025.
Among the Member States for which monthly data are available, Croatia recorded the largest increase in June 2025 (+3.6%), followed by Sweden (+2.6%) and Malta (+2.2%), while France (-0.9%), Poland, and Slovenia (both -0.8%) and Denmark (-0.7%) recorded the most significant monthly contractions in the volume of retail trade.
Services output reaches a new all-time high
In May 2025, production of services in the EU grew by 0.3%, reaching a new all-time high for the second time in the last three months. On an annual basis, the output of services in the EU grew by 1.7 % in May 2025.
Looking at the Member States for which data are available, in May 2025, the largest monthly increases in services output were recorded in Denmark (2.8%), Luxembourg (2.0%) and Poland (1.8%). By contrast, Slovakia (-1.8%), Croatia (-1.3%) and Slovenia (-1.0%) recorded the sharpest declines.
Improves the economic climate
In July 2025, the EU’s economic climate, as measured by the European Commission’s Economic Sentiment Indicator (ESI), increased by 1.0 point, returning to its May 2025 level of 95.3. The indicator continues to hover below its long-term average of 100. The increase in the ESI from the previous month was mainly driven by higher confidence in industry, services, and retail trade. At the same time, these improvements were partly offset by the decline in confidence in the construction sector, while consumer confidence improved only marginally.
At the Member State level, the economic climate showed considerable contrasts. In July 2025, Greece (109.1), Portugal (106.6) and Cyprus (106.4) reported the highest ESI values, indicative of a more optimistic economic climate. In contrast, Estonia (88.0), Hungary (89.7), and Denmark (91.0) reported the lowest values for the economic climate.
Increasing public debt
At the EU level, the public debt in relation to GDP increased in Q1 2025 compared to the previous quarter, from 81.0% in Q4 2024 to 81.8% in Q1 2025. Compared to the first quarter of 2024, the debt-to-GDP ratio increased by 0.6 percentage points.
Among the Member States, Bulgaria (23.9 %), Estonia (24.1 %), and Luxembourg (26.1 %) recorded the lowest ratios of public debt to GDP in Q1 2024. In contrast, Greece (152.5%), Italy (137.9%), and France (114.1%) recorded the highest ratios.
[1] In small countries, the absolute number of quarterly bankruptcies is very low. The small number can make the indices very volatile, as was the case for Latvia and Cyprus in the last quarter.
English version by the Translation Service of Withub
