FRANKFURT, Germany (AP) — The European economy recorded modest growth at the end of last year, pushing past turmoil over higher U.S. tariffs. Now the economy faces another hurdle: a stronger euro against the dollar that could weigh on exports.
Growth in the 21 countries that use the shared euro currency came in at 0.3% for the last three months of 2025, matching the figure from the third quarter, the EU statistics agency Eurostat reported Friday. Growth compared with the fourth quarter of 2024 was 1.3%.
Moderate growth has defied recession fears from earlier in the year, when U.S. President Donald Trump threatened to raise tariffs to levels that could have devastated trade. Talks settled on a 15% cap on U.S. tariffs, or import taxes, on goods from the European Union. The higher tax isn’t great for business — but the certainty resulting from the deal let companies at least go ahead and plan.
That assurance was dented after the quarter ended when Trump on Jan. 17 threatened EU member countries with higher tariffs for supporting Greenland against his calls for a U.S. takeover. Trump later withdrew the threat.
European services businesses — a broad category ranging from hairdressers to medical treatment — have shown moderate growth according to the S&P Global survey of purchasing managers. Exports have tanked and the industry continues to lag but showed improvement toward the end of 2025. Lower inflation of 1.9% in December — after a painful spike in 2022-2023 — and rising wages have left consumers with more purchasing power and willingness to spend.
The latest threat is the dollar’s steep fall against the euro. It is at its weakest for 4 1/2 years, which makes European exports less competitive on price in a key foreign market.
The dollar has weakened due to fears that Trump’s tariffs will slow growth and that his attacks on U.S. Federal Reserve Chair Jerome Powell will undermine the U.S. central bank’s role as an inflation fighter and protector of the dollar’s worth. The euro has risen 14.4% against the dollar in the past 12 months and traded at $1.19 on Friday.
Analysts are saying that if the dollar’s weakness against the euro continues, the European Central Bank may cut interest rates later this year to stimulate growth. The ECB holds a rate-setting meeting on Thursday but is not expected to change rates then.
Germany showed improved growth at 0.3% in the quarter, its best quarterly performance in three years, but still faces serious short- and long-term headwinds. The eurozone’s largest economy is still waiting for infrastructure and defense spending set in motion by Chancellor Friedrich Merz to show its effects through increased growth. Germany grew 0.2% last year, its first year of growth after two years of declining output. The government on Wednesday cut its growth outlook for this year to 1% from 1.3% previously.
Germany has struggled with a raft of troubles: higher energy prices after the loss of Russian natural gas due to the war against Ukraine, a shortage of skilled labor, increasing Chinese competition in key export sectors such as autos and industrial machinery, years of underinvestment in growth-promoting infrastructure, and too much red tape.
Growth for the broader 27-country European Union also came in at 0.3% for the fourth quarter of 2025 and 1.4% compared with the year-earlier quarter. Not all EU members have moved to join the euro, which gained its 21st member in January when Bulgaria joined.
FILE -Container ships lie in the harbor of Hamburg, Germany, Oct. 20, 2021. (AP Photo/Michael Probst, File)
Containers are piled up in Frankfurt, Germany, Friday, Jan. 30, 2026. (AP Photo/Michael Probst)
KYIV, Ukraine (AP) — The terms of a Russian commitment to U.S. President Donald Trump to temporarily halt its bombardment of Ukraine during one of the country's bleakest winters in years remained unclear Friday, as Ukrainians braced for even worse conditions to come next week.
Trump said late Thursday that President Vladimir Putin had agreed to a temporary pause in targeting Kyiv and other places as the region experiences freezing temperatures that have brought widespread hardship to civilians.
“I personally asked President Putin not to fire on Kyiv and the cities and towns for a week during this ... extraordinary cold,” Trump said during a Cabinet meeting at the White House. Putin has “agreed to that,” he said, without elaborating on when the request to the Russian leader was made.
The White House didn't immediately respond to a query seeking clarity about the scope and timing of any limited pause.
Kremlin spokesperson Dmitry Peskov confirmed Friday that Trump “made a personal request” to Putin to stop targeting Kyiv until Feb. 1 “in order to create favorable conditions for negotiations.”
The mention of Feb. 1 was confusing since that is only two days away. Also, the cold weather is forecast to get much worse from Sunday, with temperatures dropping even further and making the time frame for a pause in attacks hard to understand.
Russia has sought to deny Ukrainian civilians heat, light and running water over the course of the war, in a strategy that Ukrainian officials describe as “weaponizing winter.”
Asked if Moscow agreed to Trump’s proposal, Peskov said, “Yes, of course.” But he refused to answer further questions about whether the agreement covered only energy infrastructure or all aerial strikes, and when the halt on strikes was supposed to start.
Russia struck Ukrainian energy assets in several regions of Ukraine on Thursday but there were no strikes overnight, Ukraine’s President Volodymyr Zelenskyy said Friday.
In a post on social media, Zelenskyy also noted that Russia has turned its attention to targeting Ukrainian logistics networks and that Russian drones and missiles hit residential areas of Ukraine overnight, as they have most nights during the war.
Trump framed Putin's acceptance as a concession. But Zelenskyy was skeptical as Russia’s invasion approaches its fourth anniversary on Feb. 24 with no sign that Moscow is willing to reach a peace settlement despite a U.S.-led push to end the fighting.
“I do not believe that Russia wants to end the war. There is a great deal of evidence to the contrary,” Zelenskyy said Thursday. Ukraine is ready to halt its attacks on Russia’s energy infrastructure, including oil refineries, if Moscow also stops its bombardment of the Ukrainian power grid and other energy assets, he said.
Russia fired 111 drones and one ballistic missile at Ukraine overnight, injuring at least three people, the Ukrainian Air Force said.
The Russian Defense Ministry said that its air defenses overnight shot down 18 Ukrainian drones over several Russian regions, as well as the illegally annexed Crimea and the Black Sea.
Forecasters say Kyiv, which recently endured severe power shortages, will see a brutally cold stretch starting Friday that is expected to last into next week. Temperatures in some areas will drop to minus 30 degrees Celsius (minus 22 Fahrenheit), the State Emergency Service said.
The possibility of a respite in energy sector attacks was discussed at last weekend’s meeting in Abu Dhabi, the capital of the United Arab Emirates, between envoys of Ukraine, Russia and the United States, Zelenskyy said, adding that he had agreed to adhere to a “reciprocal approach” on energy assaults.
“If Russia does not strike us, we will … take corresponding steps,” he told reporters.
Further talks were expected on Sunday in Abu Dhabi, the United Arab Emirates, but that could change because of a spike in tensions between the United States and Iran.
It was unclear whether and how any partial truce might work amid ongoing wider fighting and mistrust between the two countries.
“There is no ceasefire. There is no official agreement on a ceasefire, as is typically reached during negotiations,” Zelenskyy said. “There has been no direct dialogue and no direct agreements on this matter between us and Russia.”
Ukraine had originally proposed a limited energy ceasefire at talks in Saudi Arabia last year, Zelenskyy said, but it gained no traction.
Disagreement over what happens to occupied Ukrainian territory, and Moscow’s demand for possession of territory it hasn’t captured, are a key issue holding up a peace deal, according to Zelenskyy.
“We have repeatedly said that we are ready for compromises that lead to a real end to the war, but that are in no way related to changes to Ukraine’s territorial integrity,” Zelenskyy said. “The American side understands this and says that there is a compromise solution regarding a free economic zone.”
Ukraine demands control over such a zone, he said.
Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine
In this photo provided by the Ukrainian Emergency Service, emergency services personnel work to extinguish a fire following a Russian attack in Odesa region, Ukraine, Thursday, Jan. 29, 2026. (Ukrainian Emergency Service via AP)
In this photo provided by the Ukrainian Emergency Service, emergency services personnel work to extinguish a fire following a Russian attack in Odesa region, Ukraine, Thursday, Jan. 29, 2026. (Ukrainian Emergency Service via AP)
