Growth in Europe in 2024 will be constrained by still-elevated inflation and interest rates, although conditions will improve in the second half of the year. Domestic demand will be supported by a return to real wage growth and still-tight labour markets, as well as substantial EU-funded investment.

The main political trend will be an ongoing fragmentation of voter preferences. This will complicate policymaking and result in some unwieldy coalitions. Meanwhile, public frustration with governments’ inability to improve public service provision or reduce cost- of-living pressures will intensify.

The energy sector will see further disruption from government efforts to decarbonise and reforms to protect consumers and firms from high costs. Investment to support the production and purchase of electric vehicles (EVs) will grow firmly, but other efforts to de-risk from China will underwhelm.