Data from Eurostat show that the business investment rate in the euro area fell to 21.6% in the second quarter of 2025, broadly in line with the 21.5% average quarterly rate in 2024, which remains low by historical standards. The profitability of non-financial corporations stood at 39.1%, a slight decrease from the first quarter and also subdued in historical terms.
The gross investment rate of non-financial corporations is defined as gross fixed capital formation divided by gross value added; linking investment in fixed assets (such as buildings and machinery) to the value created during production. The decline in Q2 reflects a -1.4% drop in gross fixed capital formation, reversing the unusually strong +5.0% rise in Q1, while gross value added maintained the same +0.9% quarterly growth rate as in Q1.
The investment ratio can also be influenced by large cross-border movements of intellectual property products related to globalisation. This particularly affects countries such as Ireland, where the presence of major multinational headquarters makes the data highly volatile, although the last significant impact was seen in Q1 2020.
In Q2 2025, the profit share of non-financial corporations in the euro area declined from 39.3% to 39.1%, reflecting a +1.1% rise in compensation of employees (wages and employers’ social contributions) plus taxes less subsidies on production – slightly faster than the +0.9% increase in gross value added.
The profit share is defined as gross operating surplus divided by gross value added, representing the portion of value added that rewards capital. It complements the share of labour costs and net production taxes. The modest decline in Q2 was thus driven by compensation and taxes growing marginally faster than output.
At this stage, only Eurozone data are available; EU-wide figures will be released in the coming weeks.
Full details are available from the Eurostat website’s News Release section at https://ec.europa.eu/eurostat/news/euro-indicators (7 October, listed under “Household saving rate …”), or on request from MTA.