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[Resilience Fails Against Weakness: European Economy Enters New Year Amid "Internal Divergence"] ⑴ Latest data shows that major European economies experienced weak growth momentum at the end of the year. Despite successfully weathering the impact of Trump's tariff rhetoric, the region showed few signs of recovery. ⑵ The Eurozone economy performed better than the most pessimistic expectations, partially offsetting the impact of rising US tariffs on exports and reinforcing market perceptions that the European Central Bank has ended its rate-cutting cycle. ⑶ However, economic resilience does not equate to health; its growth rate was only slightly above 1%, constrained by cautious household consumption and high government debt. ⑷ The preliminary reading of the Eurozone composite PMI for December fell to a three-month low of 51.9, below expectations, mainly dragged down by a sharp contraction in German manufacturing. However, this reading still corresponds to a respectable GDP growth in the fourth quarter. ⑸ The German ZEW investor confidence index, released on the same day, rebounded more than expected, and the Eurozone's trade surplus in October only narrowed slightly, adding a bright spot to the otherwise gloomy data. (6) Outside the EU, in the UK, business activity has gained some new momentum as uncertainty surrounding the government's fiscal plan to increase taxes has dissipated, but this may not prevent the Bank of England from cutting interest rates again this Thursday. (7) The European Central Bank's policy path is clearer, as recent hard data on economic growth, the labor market, and industrial output have all exceeded surveys and expectations, and a significant drop in energy costs has also improved terms of trade. (8) The market has fully priced in no further rate cuts by the ECB in 2026 and expects the next move to be a rate hike, while increased government spending in Germany is expected to significantly boost GDP growth over the next two years.