According to the autumn economic forecast of the European Commission, the EU economy has now entered a much more challenging phase after a strong first half of the year.

Although growth in 2022 is set to be better than previously forecast, the outlook for 2023 is significantly weaker for growth and higher for inflation, the largest threat comes from adverse developments on the gas market and the risk of shortages, especially in the winter of 2023-24. Amid the impacts of Russia’s war against Ukraine, elevated uncertainty, high energy price pressures, erosion of households' purchasing power, a weaker external environment and tighter financing conditions are expected to tip the EU, the euro area and most Member States into recession in the last quarter of the year.

The inflation rate is yet to peak before gradually easing and decline in 2023 (remaining at 9.3%) and moderate to 3% in 2024.

Despite the challenging environment, the labour market has continued performing strongly, with employment and participation at their highest and unemployment at its lowest in decades.

You can read the full forecast here.