A tale of two Europes is unfolding. While the United Kingdom grapples with the long-term economic consequences of its departure from the European Union, nations like Bulgaria are moving in the opposite direction, seeking deeper integration and economic alignment with the bloc by adopting the euro.

The latest data underscores the starkly different trajectories of these two countries, one dealing with the costs of separation and the other banking its future on inclusion.

In recent years, Europe has witnessed profound cross-border and economic shifts. Chief among them was the United Kingdom’s departure from the European Union, following the June 2016 referendum.

Since then, analysts and economists have largely agreed that Brexit has imposed lasting economic costs on the UK—ranging from reduced household income to persistent inflation and a long-term contraction in GDP.

The UK Treasury projects that the economy will be 3.9% smaller over a 15-year horizon than it would have been had the country remained in the EU.

A closer look at the UK’s economic performance since 2016 reveals a period of volatility followed by a significant slowdown. Annual GDP growth was 1.9% in 2016 and 2.7% in 2017, before moderating to 1.4% in 2018 and 1.6% in 2019. The COVID-19 pandemic triggered a sharp contraction of 10.3% in 2020, followed by a strong rebound of 8.6% in 2021.

Growth continued at 4.8% in 2022, but then slowed dramatically to just 0.4% in 2023 (some sources indicate 0.1%). This pattern suggests the UK economy may have settled onto a “bumpy plateau” after an initial V-shaped recovery from the pandemic shock.

The UK has also faced significant inflationary pressures. The Harmonised Index of Consumer Prices (HICP) recorded annual increases of 9.1% in 2022 and 7.3% in 2023. While inflation moderated to 2.5% for 2024, and was recorded at 3.5% in April 2025, the period of high inflation has had a considerable impact.

Comparatively, Eurozone HICP inflation was 8.4% in 2022, 5.4% in 2023, and 2.4% in 2024.Germany saw rates of 8.7%, 6.0%, and 2.5% respectively, while France recorded 5.9%, 5.7%, and 2.3% for the same years.

The implementation of the Trade and Cooperation Agreement (TCA) in January 2021 led to a short-term reduction in the UK’s worldwide goods exports by 6.4% and worldwide imports by at least 3.1%. This was largely driven by a 13.2% fall in UK goods exports to the EU.

Notably, this decline in EU trade was primarily shouldered by smaller firms; the smallest quintile of firms saw their relative EU exports fall by 30%, while the largest firms experienced no statistically significant reduction.

There was no evidence that the TCA indirectly affected UK exports to the rest of the world, suggesting the reduction in EU exports represented a net loss during the period studied. Monthly data can be volatile; for instance, in March 2025, total UK goods exports rose by 0.8%, with exports to the EU increasing by 1.6%.

Bulgaria’s Bet on the Euro

In stark contrast, nations such as Bulgaria are taking decisive steps to deepen their integration within the EU. By seeking to join the Eurozone, Bulgaria is not only aligning itself more closely with Brussels but also embracing a collective monetary identity.

Bulgaria has received the green light from both the European Commission and the European Central Bank to join the Eurozone, potentially becoming its 21st member. The government is targeting an accession date of 1 January 2026.

Bulgarian Prime Minister Nikolai Denkov has declared Eurozone accession a top priority for his government, citing its potential to reinforce macroeconomic stability and stimulate growth.

Bulgaria’s economy has shown resilience, with real GDP growing by 2.8% in 2024 (other estimates suggest 2.3%). Projections for 2025 anticipate growth between 2.0% and 2.4%, and around 2.1% to 2.7% in 2026.

However, the decision has not been met with universal enthusiasm. A Eurobarometer poll in late May 2025 showed public opinion nearly evenly split, with support and opposition both around 50%. An Alpha Research poll in June 2025 indicated 46.5% of the public and 66% of businesses favored joining.

Many Bulgarians—particularly those in rural and economically vulnerable regions—fear that switching to the euro will trigger a spike in prices and erode their purchasing power.

Nonetheless, experts suggest that these inflationary effects are likely to be minimal. HICP inflation in Bulgaria slowed to 2.6% in 2024 , and as of April (in the context of a June 2025 assessment), the 12-month average was 2.7%, just below the likely reference rate of 2.8% for meeting the price stability criterion. The European Commission forecasts HICP inflation at 3.6% for 2025 before falling to 1.8% in 2026.

Furthermore, Bulgaria’s currency, the lev, has been pegged to the euro at a fixed rate of approximately 1.95583 leva to one euro through a currency board arrangement since the late 1990s. This means the transition is more symbolic than structural, and price volatility is unlikely.

The experience of Croatia, which adopted the euro in January 2023, showed a “minimal” and “temporary” inflationary impact, estimated by Eurostat at 0.04 to 0.20 percentage points per month in early 2023.

A Closer Look at the Economic Impacts

Joining the Eurozone would place Bulgaria under the supervision of the European Central Bank (ECB), strengthening its financial institutions and anchoring investor confidence. This shift is expected to attract foreign direct investment (FDI) and enhance Bulgaria’s international credit profile.

FDI inflows were equivalent to 2.8% of GDP in 2024 according to one survey, though the Bulgarian National Bank reported a slowdown, with FDI increasing by EUR 1.498 billion in 2024, down from EUR 3.284 billion in 2023.

Sovereign credit ratings agencies have positive outlooks linked to Eurozone accession: S&P Global Ratings affirmed Bulgaria at ‘BBB/A-2’ with a Positive Outlook in May 2025; Moody’s affirmed a ‘Baa1’ rating with a Stable Outlook in January 2025, forecasting likely euro adoption in January 2026 ; and Fitch Ratings affirmed Bulgaria at ‘BBB’ with a Positive Outlook in April 2025.

Inclusion in the Eurozone can positively affect a country’s sovereign rating by 1.19 notches and improve borrowing conditions.

Additionally, Bulgaria’s deepening economic ties with the EU are already evident. For January to May 2024, exports to the EU amounted to BGN 22,176.3 million, representing approximately 64.9% of Bulgaria’s total worldwide exports of BGN 34,145.7 million.

In 2023, its main EU trading partners were Germany (13.7% of total exports), Romania (9.2%), Italy (7.2%), Greece (5.5%), and France (3.3%). These top five EU partners accounted for over 40% of Bulgaria’s total exports.

The majority of its exports go to fellow EU nations, with trade centred on machinery, manufactured goods, and food products. Recent data for Q1 2025 showed notable growth in exports of ‘Food and live animals’ to the EU (up 32.2%) , while other periods saw growth in ‘Mineral fuel, lubricants and related materials’ or ‘Beverages and tobacco’.

Key exports to Germany in 2023 included precious metal ore and motorcycles , while to Romania, they included petroleum gas and electricity. Euro adoption would eliminate currency conversion costs and facilitate smoother cross-border transactions.

Tourism and Consumer Flow

Tourism is another sector poised for uplift. Bulgaria has increasingly positioned itself as an all-season tourist destination, offering beach holidays in summer and ski resorts in winter. In 2024, the country welcomed over 13 million foreign tourists. Another source focusing on holiday arrivals noted 5.79 million visitors from abroad in 2024, with 3.0 million (51.8%) from other EU countries.

In 2023, key Eurozone source markets included Greece (1,109,412 visitors) and Germany (897,480 visitors). Combined, six key Eurozone countries (Greece, Germany, France, Netherlands, Austria, Italy) accounted for approximately 2.76 million visitors in 2023, about 21.8% of the total arrivals that year.

Bulgaria also ranked among the top five EU countries for growth in tourist overnight stays in Q2 2024 (up 6.3% vs Q2 2023), with inbound tourism accounting for 55% of these stays. Euro adoption is likely to further streamline spending for EU visitors, removing exchange rate friction and encouraging greater consumer flow.

A Strategic Step Forward

While the public remains cautious and some scepticism lingers , Bulgaria’s accession to the Eurozone represents a strategic leap toward stronger economic integration.

The transition may come with challenges—but also with significant opportunities, as seen in Croatia which experienced benefits like the elimination of foreign exchange risk and reduced transaction costs (estimated at EUR 160 million annually for the non-financial sector).

In a time when European unity faces tests on many fronts, Bulgaria’s embrace of the euro underscores its commitment to a shared European future.