The European economy saw growth at the end of last year despite U.S. tariff turmoil, with a 0.3% increase in the last quarter of 2025. This growth matched the third quarter and was at 1.3% compared to the previous year. However, a stronger euro against the dollar may hinder future exports.

European services businesses have shown moderate growth, with consumers benefiting from lower inflation and rising wages. Exports have struggled, but there has been improvement. The recent threat is the dollar’s 4 1/2 year low against the euro, making European exports less competitive in foreign markets.

Germany saw improved growth at 0.3% in the last quarter, marking its best quarterly performance in three years. However, the country still faces challenges like higher energy prices, a labor shortage, Chinese competition, infrastructure underinvestment, and bureaucratic hurdles.

The broader 27-country European Union also experienced 0.3% growth in the fourth quarter of 2025. Not all EU members use the euro, but Bulgaria recently joined. The European Central Bank may cut interest rates if the dollar continues to weaken against the euro, but no changes are expected at the upcoming rate-setting meeting.

Read more at Yahoo Finance: Europe sees modest growth, but the weaker US dollar looms as a threat