Analysis by Natixis CIB
In 2025, the eurozone experienced a slowdown in wage growth (both nominal and real), which reduced households’ purchasing power and limited their consumption capacity.
According to our wage decomposition model, this slowdown in the eurozone masks highly divergent national realities. In Germany and Spain, wage growth remained robust, whilst in France and Italy there was a more pronounced slowdown. These contrasting trends call for an analysis that examines in greater detail the factors influencing wage growth, in particular: the impact of inflation, labour market tightness and the trend in per capita wages.
Recent developments in these three factors point to a further slowdown in real wages in 2026, estimated at 0.4 per cent following the 2.1 per cent recorded in 2025, and in nominal wages, which are set to stand at 3.2 per cent following the 4.3 per cent recorded in 2025.
In 2027, however, the outlook improves: the slowdown in inflation, together with a slightly more dynamic labour market, should support a recovery in real wages, which we forecast at 1% and 3.2% in nominal terms.
Our findings therefore suggest that second-round effects in the eurozone (and in the four main countries) would be limited in 2026, despite the rise in inflation linked to the consequences of the war in Iran. The gradual recovery in wages in 2027 is thus consistent with our scenario of the ECB maintaining the status quo.
Some of the report’s conclusions are:
- Spain continues to enjoy one of the highest rates of wage growth in the eurozone. Whilst wage growth is slowing across the eurozone as a whole, Spain and Germany continue to experience dynamic wage growth, in contrast to France and Italy, where the slowdown is much more pronounced.
- The slowdown in wage growth is much more limited than in other countries. Although nominal wages are also losing momentum, the adjustment is significantly smaller than in France. The report highlights that the decline in the rate of wage growth in Spain stands at 2.3 percentage points, compared with 6.4 points in France.
- Spain leads the way in real wage growth. It is the only major eurozone country to have recorded three consecutive years of strong real wage growth, outperforming the monetary union as a whole.
You can view the full report here.
