EU growth slows as Cyprus maintains strong economic performance

Cyprus’ recent economic expansion and strong fiscal performance come against a backdrop of moderating growth across the European Union, where gross domestic product (GDP) increased by 0.5 per cent in the third quarter of 2026, according to preliminary figures published by Eurostat. The euro area economy grew by 0.4 per cent between July and September, while the EU as a whole recorded growth of 0.5 per cent compared with the previous quarter. The figures point to a slowdown from the second quarter, when GDP increased by 0.6 per cent in the euro area and 0.7 per cent across the EU. However, annual growth strengthened slightly, with euro area GDP rising by 1.3 per cent in the third quarter compared with the same period of 2025, up from 1.2 per cent in the previous quarter. Across the EU, year-on-year growth reached 1.5 per cent, compared with 1.4 per cent in the second quarter. Among member states for which data were available, Ireland recorded the strongest quarterly expansion, with GDP increasing by 5.5 per cent. Estonia, Spain and the Netherlands followed, each recording growth of 0.6 per cent. By contrast, Lithuania’s economy contracted by 1 per cent, while France recorded a smaller decline of 0.1 per cent. The year-on-year growth rate was positive in 14 countries for which figures were available and negative in one. Eurostat stressed that the figures are preliminary flash estimates, based on incomplete data sources and therefore subject to revision as further information becomes available. The latest figures provide a broader European context for Cyprus’ recent economic performance, which has been comparatively strong in recent years. Eurostat data previously showed that Cyprus’ economy expanded by 25.8 per cent in real terms between 2019 and 2024, placing it among the EU’s strongest performers over the period. That compared with overall EU growth of just 5.6 per cent, underlining the island’s recovery and expansion between the final year before the Covid-19 pandemic and 2024. The regional comparison covered 244 EU regions with available data, of which 197 recorded higher economic activity in 2024 than in 2019. Economic output declined in 46 regions, while Spain’s Ciudad de Ceuta recorded no change. Cyprus has also recorded strong public finances, with the country achieving the EU’s highest government surplus in 2025, equivalent to 3.6 per cent of GDP. The surplus amounted to €1.36 billion, while government debt stood at €20.05 billion, or 52.3 per cent of GDP. Cyprus was one of only five EU member states to record a surplus last year, alongside Denmark, Greece, Ireland and Portugal. Government revenue rose by 7.7 per cent in 2025, increasing by €1.14 billion to almost €15.9 billion, compared with €14.76 billion in 2024. At the same time, the country’s tax-to-GDP ratio increased to 36.3 per cent in 2025, from 36 per cent a year earlier, although it remained below the EU average of 40.7 per cent and the euro area figure of 41.3 per cent. EU-wide tax and social contribution revenues increased by €401 billion in 2025, reaching €7.68 trillion. The tax-to-GDP ratio measures the combined revenue governments collect from taxes and net social contributions as a share of the overall economy.