What: Visa reviews the situation in Europe to understand if there is light at the end of the tunnel.

Why it is important: To make a long story short, the answer is “yes, maybe”.

The economic landscape of 2024 shows signs of a potential turnaround following a sluggish start, particularly in Europe. Despite varying economic performance across countries, with the U.K. and Germany experiencing recessions and Spain showing relative strength, there is a general easing of inflation and a resilience in labor markets across the region. Central banks are cautiously optimistic, adjusting their inflation forecasts and tempering expectations for immediate rate cuts.

Consumer spending in Europe remains subdued but is expected to gain momentum as real incomes improve and inflation pressures subside. According to Visa’s regional Spending Momentum Index, consumer spending growth is evident, though Italy has seen a stagnation. Consumer confidence has reached a two-year high, supporting forecasts of continued spending increases throughout the year.

Inflation in the Eurozone is on a disinflationary path, with significant reductions from a peak of 10.6% to 2.4% by March. Some nations, including Italy, Ireland, and Finland, have seen inflation rates dip below the European Central Bank's target of 2%. Core inflation is also decreasing, projected to stabilize at 2% by the end of the year, fostering expectations for a rate cut by late spring or summer.

Europe: is a turnaround coming soon?