The European Commission has released a forecast: what the EU’s economic stagnation means for Ukrainian refugees

The European Commission has published an economic forecast outlining the overall outlook for the European Union economy for 2025-2026. This document is traditionally one of the key points of reference for member states, investors, social partners and citizens planning their economic future. But in conditions where millions of Ukrainians continue to remain in the EU under the status of temporary protection or within humanitarian programs, the European Commission’s forecast acquires another important dimension — social and humanitarian. How will economic stagnation affect the well-being, integration, employment and housing conditions of Ukrainian refugees in the next two years? Does this mean a new stage — a gradual transition from emergency care to long life in European countries?

What is the economic forecast of the European Commission

The European Commission provided an economic forecast in which it indicated that the EU economy at the beginning of 2025 shows slow but steady growth: real GDP should increase by 1.1% within the entire European Union and by 0.9% in the euro area – about the same level as in 2024. At the same time, a moderate acceleration is expected in 2026 — up to 1.5% in the EU and 1.4% in the Eurozone. These growth rates are based on the assumption of general economic stabilization against the background of trade uncertainty, a decrease in inflationary pressure and weak but positive dynamics of private consumption.

The forecast specifies that inflation in the Eurozone will decrease from 2.4% in 2024 to 2.1% in 2025 and to 1.7% in 2026. Within the entire EU, these indicators will be slightly higher, but in a similar trend: slightly above 2% in 2025 and below 2% in 2026. The disinflation process, which began at the end of 2022, will continue thanks to the sharp drop in energy prices from the fall of 2024 and the strengthening of the euro.

Against this background, it is noted that the EU economy, despite obvious external difficulties, turned out to be more stable than expected. In the fourth quarter of 2024, the growth rate was 0.4%, and in the first quarter of 2025, preliminary data indicate a 0.3% increase in GDP. This result was achieved primarily due to the preservation of domestic demand.

However, the spring forecast clearly states that the global trade situation is deteriorating. The growth rate of the world economy (outside the EU) has been reduced in the forecast from 3.6% to 3.2% for both 2025 and 2026. The dynamics of trade between the US and China are particularly weak, despite the easing of tariffs in May 2025. As a result, exports from the EU will grow by only 0.7% in 2025, with a partial reduction in exports of goods, which is offset by the stability of exports of services. In 2026, exports are expected to grow by 2.1%.

At the same time, domestic investment activity remains moderate. After a contraction of 1.8% in 2024, gross investment is expected to grow by 1.5% in 2025 and by 2.4% in 2026. The main growth will take place in the field of infrastructure construction, research and development, as well as residential construction. Investments in equipment should intensify only in 2026.

Private consumption is expected to accelerate from 1.5% in 2025 to 1.6% in 2026. This is due to an increase in real wages and a decrease in inflationary pressure. At the same time, the high level of household savings continues to limit consumer activity.

The EU labor market remains strong. In 2024, 1.7 million new jobs were created in the economy. By the end of 2026, another 2 million are expected to be created. In 2026, the unemployment rate will fall to 5.7%, the lowest rate in the history of the EU. Wages, which rose by 5.3% in 2024, will slow their growth but continue to rise in real terms, fully offsetting the loss of purchasing power caused by inflation in previous years.

The budgetary policy predicts a slight increase in the deficit. After falling to 3.2% in 2024, the general government deficit in the EU will remain at 3.3% in 2025-2026. Debt as a percentage of GDP will also increase: from 83.2% in 2025 to 84.5% in 2026. This growth is due to a slow slowdown in fiscal consolidation following the pandemic and new spending related to security, climate and infrastructure investment support.

In the section on risks and uncertainties, the forecast highlights the growing impact of politics on the global economy. It is emphasized that the further fragmentation of world trade can restrain GDP growth and contribute to the recovery of inflationary pressure. The frequency of climatic disasters also remains a source of negative impact on the forecast. However, further de-escalation of trade tensions between the EU and the USA, as well as the conclusion of new trade agreements with third countries, can be a positive factor. A positive effect is also possible from the growth of defense spending, the deepening of the Single Market, the formation of the Savings and Investments Union, as well as the simplification of the regulatory environment within the EU.

What to expect for Ukrainian refugees

Social programs: stability without expansion

One of the key conclusions of the economic forecast is that the public finances of EU countries remain strained, but not critical. After reducing the deficit to 3.2% of GDP in 2024, it will increase slightly to 3.3% in 2025-2026 and remain at this level. Such dynamics do not require the immediate introduction of austerity measures, as was the case after the 2008 financial crisis or the COVID-19 pandemic.

This means that EU countries are unlikely to drastically cut refugee support programs, including housing subsidies, health care funding or public transport benefits. However, expansion of these programs in the future seems unlikely. The economic situation does not provide resources for new initiatives, and the growing needs for financing defense, green transition, and domestic infrastructure are increasingly competing for the same budgetary resources.

This especially applies to municipal budgets, where specific services are allocated – kindergartens, translators, medical clinics, social workers. In countries where there are many Ukrainians (such as Poland, Germany, the Czech Republic), the local authorities are already declaring a lack of funds to continue the programs in the same volume.

Housing: the deficit will persist until at least 2026

The housing situation for Ukrainians in Europe is one of the most vulnerable. The spring forecast records that in 2024, investment in residential construction has declined due to general economic uncertainty and rising credit costs. A gradual recovery is expected in 2025, and an acceleration in 2026. But this process takes time: even under optimistic scenarios, new housing will be built no earlier than 2026. In addition, the share of affordable or social housing among these volumes will be small.

For Ukrainian refugees, this means further living in overcrowded hostels, crisis centers or rented apartments with high rates. Some countries, such as Austria or Denmark, are already implementing rules to gradually transfer people from free housing to partial or full payment. For families without a stable income or with children, this can be a reason to move, change status or return to Ukraine despite the existing risks.

Labor market: preserving jobs, but intensifying competition

Despite the low rates of economic growth, the EU labor market shows stability. In 2024, 1.7 million new jobs were created, and another 2 million are projected by 2026. The unemployment rate in 2026 should fall to a record low of 5.7%. In such conditions, Ukrainian refugees have a chance to keep their jobs, especially those who have already integrated into the local labor markets.

At the same time, the slowdown in investment (only 1.5% in 2025) and weak export growth may lead to a freeze or reduction of vacancies in production, logistics, and construction. For Ukrainians without knowledge of the language or with limited qualifications, this means tougher competition. The growth of real wages among the local population may be accompanied by demands for priority employment of EU citizens — and this rhetoric is already appearing in the Baltic states, Slovakia, and Italy.

Integration services: dependence on political will

Although macroeconomic stability allows maintaining language courses, vocational retraining programs and social support, their scope and quality will depend primarily on national policies. The spring forecast does not take into account political decisions, but emphasizes the growth of internal risks: fragmentation, growing radical sentiments, pressure on budgets.

In a number of countries (in particular, France, Hungary, the Netherlands), the issue of immigration is an element of political struggle, and Ukrainians can fall under general restrictions, even if their legal status is different. The elections to the European Parliament in June 2025, as well as national elections in a number of countries in the fall, are capable of reshaping the integration policy not because of economics, but because of political considerations.

Consumption and prices: positive dynamics, but limited benefits

The forecast for inflation in the Eurozone to fall to 2.1% in 2025 and to 1.7% in 2026 is a good signal for refugees. This means that the cost of products, transport, rent (at least in the general trend) will grow more slowly. But the prices are already high, especially for those who do not have a stable income or work in the lower-paid sector. In addition, even with zero inflation, the savings of Ukrainians are practically exhausted for the years 2022-2024. Therefore, the benefit from the slowdown in prices will be rather symbolic.

At the same time, the growth of private consumption in the EU looks positive — 1.5% in 2025, 1.6% in 2026. This creates demand for services, which can create jobs in the service sector. But in the same sphere, competition and segregation based on the linguistic and civic principles are felt most strongly.

So, the spring economic forecast is not an alarm signal, but it also does not contain any hint of systemic improvement of conditions for Ukrainian refugees. The EU remains economically stable, inflation is slowing, the labor market is strong but growth is sluggish, and global risks — from trade conflicts to climate catastrophes — remain.

For Ukrainian refugees, this means a transition to a new phase: maintaining a basic level of support without expanding it, growing dependence on independence and the need for integration. Government programs that operated in the emergency regime of 2022-2023 are gradually being transformed. Those who do not integrate risk losing support, while those who have integrated will get a chance for a decent life, but not without effort. The next two years will be a test not only for the policies of EU countries, but also for the ability of Ukrainian refugees to adapt to a new, less emotional and more structural phase of coexistence.