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France and Spain Tours & Trips

Find the right tour for you through France and Spain. We've got 126 tours going to France and Spain, starting from just 3 days in length, and the longest tour is 33 days. The most popular month to go is October, which has the highest number of tour departures. Find the best Spain 10 day itineraries .

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126 france and spain tour packages with 187 reviews.

• In-depth Cultural
• Coach / Bus
• Christmas & New Year

A Virtuous Line

Tour guides were very helpful and respectful. Pick up at airport, bus or train was always on time.

France, Spain and Portugal

Great see it all kind of tour. Albeit, demanding at times with its rigid schedule for departures and short turnarounds at some very interesting places. But we knew ahead of time what to expect considering all we saw and had to see. The best tour guide we had during all 17 days on this circuit was Luis Cebollada. He consistently went out of his way to accommodate requests and improve upon the cultural experience in each country. His knowledge of the sights and the people was insightful and very helpful during our tour. All and all...a memorable and unforgettable experience.

Ultimate Spain & Portugal

My husband and I loved our Portugal- Spain tour. There was plenty of free time and all of the group adventures were wonderful. Our CEO Beatriz Oubel went above and beyond to help every person on the tour. She was knowledgeable, helpful and never showed any signs of stress for the entire 21 days. She made the entire vacation better. We will definitely search out tour with her as CEO. Susan Mendes

London to Barcelona Quest (Summer, Start London, 8 Days)

• €100 deposit on some dates Some departure dates offer you the chance to book this tour with a lower deposit.

Highlights of France and Barcelona (End Barcelona, 10 Days)

Great tour with amazing sights - cathedrals and castles. Excellent Guide Pascal and Excellent Driver Luis.

London to Barcelona Quest (Summer, Start Paris, 8 Days)

Classic Spain

The Southern Spain portion was my favourite part. The Northern Spain portion was nice but I found the Bilboa stay too long and would have preferred to stay in San Sebastien instead and simply done a day trip to Bilbao. Unfortunately we missed out on the San Sebastien day trip due to a COVID case in our tour group (our guide) and all of us needed to be tested…2 other travellers were also positive and 2 more tested positive in the following days. The paella cooking class in Barcelona was a highlight!

• Sightseeing

Hidden Gems of Northern Spain

Highlights of France and Barcelona (End Madrid, Madrid Extension, 12 Days)

Great trip. Awesome guide

Grand Spain & Portugal (Small Groups, End Madrid, 18 Days)

Best of Spain & Southern France & Italy Lakes - 19 Days (Small Group)

Spanish Heritage (Classic, End Barcelona, 18 Days) (22 destinations)

SPIRIT OF EUROPE

London to Bordeaux, the Basque Country and the Beach

• 10% deposit on some dates Some departure dates offer you the chance to book this tour with a lower deposit.

• Train & Rail

Barcelona to Paris

What people love about france and spain tours.

Excellent tour guides. Excellent hotels for the price. Saw a lot of beautiful places. I was only disappointed that I booked a couple of excursions that did not take place. I still need to request a refund for them. Overall very worth it.

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Highlights of France and Barcelona

365 reviews

Discover the beauty of France and Barcelona

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10 Day France and Spain Tour of Paris, Lyon, French Riviera and Barcelona

10 days, 3 countries and 13 cities

Accommodation

9 Breakfasts, 4 Dinners

View day-by-day trip itinerary

One of our most popular France and Spain trips, this jam-packed journey from Paris to Barcelona is a feast for every sense, from lunch with locals and elegant châteaux in the Loire Valley, to the buzz of Avignon’s Place de l’Horloge and the irresistible French Riviera.

Looking to book in a group of 9 or more?

Deals, savings and exclusive private touring options available plus if you need a different date or itinerary change we can create a custom trip. Contact us for more details

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Day by day itinerary

10 days itinerary trip from Paris to Barcelona visiting 3 countries and 13 cities Extend Your Tour

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Choose to end your tour in Barcelona or add a two-night extension to explore Madrid.

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With Madrid Extension

This tour version travels to Madrid for an additional two-night stay.

About this trip

Sightseeing highlights.

Explore Paris, Lyon, Carcassonne and Barcelona with a Local Specialist

Discover Avignon, Nice, Monaco and Arles

Visit Saint-Sulpice Church in Paris, Château de Chenonceau in the Loire Valley and the Dalí Theater and Museum in Figueres

View Notre Dame Cathedral and the Eiffel Tower in Paris, Chartres Cathedral, Château de Chambord, the Popes' Palace of Avignon, the Promenade des Anglais and Place Masséna in Nice, Monaco's Royal Palace and Cathedral, the Roman Amphitheater of Arles and the La Sagrada Família and Columbus Monument in Barcelona

Scenic Drive through the Loire Valley

Travel highlights

Specific transfer information can be found here:

Airport Transfers

An expert Travel Director and professional Driver

Cherry-picked hotels, all tried and trusted

All porterage and restaurant gratuities

All hotel tips, charges and local taxes

Breakfast daily and up to half of your evening meals

Must-see sightseeing and surprise extras

Audio headsets for flexible sightseeing

Luxury air-conditioned coach with Wi-Fi in most countries or alternative transportation (such as rail journeys)

Optional Experiences and free time

High-speed train from Barcelona to Madrid

On occasion, hotels of similar standard and location may be utilized.

MAKE TRAVEL MATTER® Experiences

Every one of our tours includes at least one conscious travel experience that supports one or more of the United Nations Sustainable Development Goals (SDGS). Look out for yours within the day-by-day trip itinerary.

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Net-zero by 2050

Travel knowing our 4-point climate action plan will ensure net-zero greenhouse gas emissions by 2050.

Support Local

Your tour directly supports local communities by visiting family-run businesses, UNESCO sites and places of cultural significance.

Sustainable Practices

Every part of our business, from trip design to how we run our offices, aligns to our 5-year sustainability strategy which ensures a positive impact on people, the planet and wildlife.

Philanthropic Efforts

Our not-for-profit, the TreadRight Foundation, invests in nature-based solutions to address climate change.

You’ll make a positive impact to people, planet and wildlife on this tour

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London, Paris & Madrid

4.7 out of 5 stars

You have up to 60 days to get a full refund

Feel good about putting a tour on the calendar today: Enroll in AutoPay or pay in full when you book, and if you change your mind,  you’ll get your money back .†

Set off on a cultural journey through three of Europe’s iconic cities.

Immerse yourself in history as you explore the capitals of the United Kingdom, France, and Spain on this exciting trip. Walk in the footsteps of British monarchs as you uncover the highlights of London. Sip champagne and view storied Parisian landmarks in the City of Light. Enjoy energetic fiestas and relaxing siestas in imperial Madrid. On this tour, you’ll discover just what makes each fast-paced hub so unique.

Your tour package includes

• 9 nights in handpicked hotels
• 9 breakfasts
• 3 dinners with beer or wine
• 3 sightseeing tours
• Expert Tour Director & local guides

Included highlights

• Buckingham Palace
• Eurostar train ride
• Arc de Triomphe
• Eiffel Tower photo stop

An expert specializing in tours of this region is here to help.

Day-by-day itinerary

Board your overnight flight to London today.

Welcome to England! Meet your Tour Director and fellow travelers at a welcome dinner this evening.

View the regal landmarks of England’s vibrant and cosmopolitan capital on a guided sightseeing tour.

• Pass the grand Trafalgar Square and Baroque-style St. Paul’s Cathedral, perched atop Ludgate Hill
• See Westminster Abbey, the setting for royal coronations, weddings, and funerals
• View icons like Big Ben, the London Eye, Tower Bridge, and the Tower of London
• Stop by Buckingham Palace, where you may catch the Changing of the Guard

Enjoy a free afternoon in London or add an excursion.

Windsor Castle

From $125 per person

Spend a free day in London or add an excursion.

Stonehenge & Oxford

From $145 per person

Enjoy a ride on the famous, high-speed Eurostar train as you’re whisked beneath the English Channel on your journey to Paris, France.

Later, sit down for an included dinner with your group.

Please note: Porterage is not included for the train transfers. Travelers must be comfortable lifting and carrying all luggage over steps, onto platforms, and into luggage storage

A guided tour introduces you to the architecture, scenery, and history of the City of Light’s many neighborhoods, called arrondissements.

• Drive down the sycamore-lined Champs-Élysées to view the Arc de Triomphe
• Pass Pont Neuf and the legendary Notre-Dame Cathedral, located on an island in the Seine River
• See the Eiffel Tower, the Palais Garnier opera house, and Place de la Concorde, the city’s grandest square
• Marvel at the iconic architecture of the Louvre and Hôtel des Invalides

Enjoy a free afternoon or add an excursion.

Versailles Palace & Gardens

From $139 per person

Spend a free day in Paris or add excursions.

Monet & the Landscapes of Giverny

From $109 per person

Dinner in Paris & Seine River Cruise

From $129 per person

Fly to Madrid, Spain and enjoy free time in the city.

Explore the Spanish capital’s beautiful architecture, lively squares, and grand boulevards on a guided sightseeing tour.

• View the Royal Palace, Spain’s largest royal residence
• Pass by the Temple of Debod, a reassembled temple from ancient Egypt
• View the city’s many squares, including Plaza Colón and Plaza Neptune
• Explore the Prado, a world-class art museum that began as the private collection of the Spanish monarchy and is home to the works of Goya, Velásquez and more

Traditional Spanish Evening

From $119 per person

Spend a free day in Madrid or add an excursion.

Then, celebrate your trip with your group at a farewell dinner.

From $105 per person

Transfer to the airport for your flight home or continue your journey to Lisbon, Portugal.

Fly to Lisbon, Portugal this morning and enjoy free time in the city or add an excursion.

Lisbon Home-Hosted Dinner

From $89 per person

Get to know Lisbon, the Portuguese capital on a tour with a local guide.

• Admire views of the city from Eduardo VII Park and pass the Praça Marquês de Pombal as you travel along Avenida da Liberdade
• Stop at the waterfront to discover the city’s maritime heritage at the Monument to the Discoveries and Tower of Belém
• Enter the church at Jerónimos Monastery, built to honor voyagers
• Walk from Time Out Market through the heart of the city to Praça do Comércio

Later, enjoy a free evening in Lisbon or add an excursion.

Fado Show & Dinner

Spend a free day in Lisbon or add an excursion.

Then, gather with your group for a farewell drink and raise a glass to your trip.

Sintra & the Portuguese Riviera

From $99 per person

Transfer to the airport for your flight home.

Book for just $99 down

That’s all it takes to secure your spot on tour with AutoPay. Then, pay for your trip in interest-free, monthly installments.†

Overall rating 4.7 out of 5

5 out of 5 stars

10-day, 3 countries Tour: London, Paris and Madrid. Wonderful educational experience. Very knowledgeable tour guides. Highlights of each place. Nice, clean hotels strategically located with full breakfast buffets. Our tour director, Simon, was very well organized, gave us clear instructions and up...

We are so delighted that you enjoyed your time wit...

4 out of 5 stars

Nice tour for viewing the highlights of each City, however, can be a little fast-paced at times when traveling to the next place. I would certainly go again but maybe just do one or two cities more in depth. Overall it was a wonderful time, great guides and a terrific group of Travelers together. Th...

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Hotels, flights & FAQ

This relaxing hotel is located in the residential area of Kensington in London. Guests enjoy views of the city, spacious rooms, and many on-site dinin...

This chic hotel is located in the 17th arrondissement of Paris. Guests enjoy the private garden area, Jazz Club, and fitness center. Nearby you'll fin...

This modern luxury hotel is located in Barcelona’s El Poblenou neighborhood. Guests enjoy multiple restaurants and bars, a swimming pool, and a spa. N...

This modern hotel is located in Madrid’s Imperial neighborhood. Guests enjoy a terrace bar, restaurant, and outdoor swimming pool. Nearby you’ll find ...

• Round-trip flight for your tour
• Airport transfers at your destination
• A great price locked in today
• 24/7 support from our dedicated service team
• Options for arriving early, staying longer, or requesting an upgrade
• Flexible rebooking options if your tour itinerary changes
• Find out more about flights
• This tour visits the United Kingdom, France, and Spain (as well as Portugal on the tour extension). In order to enter these countries, U.S. and Canadian citizens need a valid passport with an expiration date extending at least six months beyond the date of reentry.
• We recommend having at least one blank passport page for entry stamps.
• Beginning in 2025, U.S. and Canadian passport holders must register for an ETIAS travel authorization in order to enter many European countries.
• Passport holders from over 60 visa-exempt countries (including the U.S. and Canada) will need to apply for an ETIAS travel authorization in order to visit 30 European countries. That means that even if you’ve previously traveled to any of these European countries without a visa, starting in 2025, you’ll need to get ETIAS authorization to visit them again. If you’re traveling to multiple countries with this requirement, you only need to complete the form once. All Go Ahead travelers are responsible for obtaining their own ETIAS travel authorization before departure. For more details, please visit our Help Center .
• If you are not a U.S. or Canadian citizen, you must contact each country’s consulate for your specific entry requirements.
• You can see the most up-to-date entry requirements for the destination(s) you’ll visit on tour by going to goaheadtours.com/entry-requirements and searching the code LPM.
• You will walk for at least 1.5 hours daily across mostly flat terrain, including paved roads and cobblestone streets, with few hills or stairs.
• Travelers should be healthy enough to participate in all included walks without assistance. Adding optional excursions may increase the total amount of walking on your tour.
• You should feel comfortable managing your own baggage at times, as well as getting in and out of trains.
• Go Ahead Tours and the Tour Director who accompanies your group are unable to provide special, individual mobility assistance to travelers on tour. The responsibility of the Tour Director is to ensure the group as a whole enjoys a relaxing and informative journey, and he or she cannot be relied upon to provide ongoing, individualized assistance to any one traveler.
• If you have any mobility concerns or physical restrictions, please contact our Customer Experience Team.
• Round-trip flights booked through Go Ahead Tours arrive in London and depart from Madrid (or Lisbon on the tour extension). When you first arrive in London, a driver from a private chauffeur service will be standing at the arrival gate with your name on a message board. If you do not see your driver, please remain in the arrival lounge, as the driver may be escorting one of your fellow travelers to the shuttle at the time of your arrival. For more details, please reference the London transfer information included in your Go Kit.
• Transfers to and from the airport at your destination are included for travelers who have purchased their flights through Go Ahead Tours. Travelers who purchase their own flights may request airport transfers with Go Ahead Tours for an additional cost.
• A train ride from London to Paris and a flight from Paris to Madrid are included in the price of your tour. (The tour extension also includes a flight from Madrid to Lisbon.)
• All other included transportation on this tour is by private motor coach.
• Please note that our travelers are limited to one checked bag and one personal item per person due to storage limitations on motor coaches and other transfers, which may include train connections or flights.
• Contact your airline(s) for baggage size and weight restrictions for your flights, which may include on-tour flights in addition to your round-trip flights to and from tour. Please note that your included on-tour flights may have more restrictive baggage limits.
• Some airlines may impose additional charges if you choose to check any baggage or exceed baggage size and weight restrictions. Be advised that you are responsible for any baggage fees incurred on all flights.
• Make sure you label your baggage and keep valuables, medication, and documents in your carry-on bag.
• Porterage is not included for the train transfers. Travelers must be comfortable lifting and carrying all luggage over steps, onto platforms, and into luggage storage. The storage space on the train is extremely limited, so we recommended traveling with only one suitcase per person (and a personal item such, as a backpack or purse).
• We recommend lightweight, loose-fitting clothing that can be easily layered to accommodate varying temperatures, as well as a light jacket or rainwear.
• A sturdy pair of walking shoes or sneakers is recommended for sightseeing.
• You may want to pack dressier attire if you plan to visit a high-end restaurant or attend a special performance.
• It is preferable not to visit churches or other religious sites with bare legs and shoulders (and entrance may be denied on this basis).
• At least 60 days prior to departure, check with your doctor or healthcare provider for the latest updates and entry requirements, or visit the Center for Disease Control and Prevention website at cdc.gov .
• If you have medication that you take daily, be sure you have enough for each day of the tour as well as any possible delays encountered.
• If you have dietary restrictions and/or food allergies please notify Go Ahead Tours at least 30 days prior to departure by logging in to your account and updating your traveler info. To update this information closer to your departure date, please call our Customer Experience Team.
• You can see the most up-to-date entry requirements for the destination(s) you’ll visit on tour by going to goaheadtours.com/entry-requirements and searching the code LPM
• For traditional English fare at a reasonable price, try a pub meal of fish and chips or bangers and mash. Stilton cheese, steak and kidney pie, and Cumberland sausages are also worth a try.
• Modern-day London boasts an array of diverse international restaurants. Popular options include Indian, Thai, Chinese, Indonesian, Greek, and West African cuisine. Sip afternoon tea with delicious finger sandwiches and scones at Harrods for the ultimate in English tradition.
• For a picnic with French flair, stop at a small grocery store for cheeses, pâtés , cured meats, fresh-baked bread, and fruit. In the cities, sidewalk vendors are known for their steaming crepes, while mouthwatering pastries and hot café au lait beckon from cafes. In restaurants, the prix fixe option is a popular way to enjoy a set three- or four-course menu for a good price.
• Although lunch is generally served from noon until 2pm in France, dinner is served from 7:30pm onward. Those wishing to eat earlier can stop at a cafe, where light entrées and sandwiches are available throughout the afternoon and evening.
• In Spain, breakfast like a local with just a pastry and coffee. Then, tuck into a three-course lunch featuring a Spanish staple like savory seafood paella or grilled meat and fried potatoes. Dinner is less hearty than lunch and is served late, between 9pm and midnight. Snack on small plates called tapas any time of day.
• Portuguese food, on the tour extension, is fresh, hearty, and delicious. Try seafood stew cooked in a cataplana , a shell-shaped copper pan, or the national dish, bacalhau (salted cod). A couvert , or simple plate of bread, butter, and olives, is often served when you sit down to a meal—while it is free in many restaurants, some will add a charge to your bill for it.
• The United Kingdom operates on the European standard 220-240 volts and uses a Type G plug with three large, flat pins.
• France and Spain (as well as Portugal on the tour extension) operate on the European standard 220-240 volts and use Types C, E, or F plugs with two small, round pins.
• We recommend packing a universal adapter, as well as a voltage converter if you plan on using your own hairdryer or other electrical device without a built-in converter.
• The strength of the air conditioning in European hotels is often not as strong or as cool as what you might be used to in the U.S. or Canada. When air conditioning is available, it is usually regulated seasonally and controlled centrally by the hotel.
• Some of the hotels on this tour will provide hairdryers, irons, and other small appliances, but these amenities cannot be guaranteed.
• Wi-Fi is available in most hotels, though some charges may apply.
• There is no Wi-Fi on any of the motor coaches.
• Please contact your mobile service provider for information on roaming charges.
• The United Kingdom (as well as Portugal on the tour extension) is on Greenwich Mean Time (GMT), which is five hours ahead of Eastern Time (ET).
• France and Spain are one hour ahead of GMT and six hours ahead of EST.
• When it’s noon in New York, it’s 5pm in the United Kingdom and 6pm in France and Spain (as well as in Portugal on the tour extension).
• You will use the Pound sterling in the United Kingdom and the euro in France and Spain (as well as in Portugal on the tour extension).
• Better rates of exchange are usually available overseas, but you may choose to order some currency from your local bank to use when you first arrive.
• We strongly advise that you take debit/bank cards and credit cards, which can be used to withdraw cash at local banks as needed.
• You can use most debit/credit cards at ATMs on the international networks Cirrus and Plus, but make sure to check with your home bank about withdrawal fees.
• Inform your bank and credit card company of your travel plans so that they won’t confuse your international purchases for fraudulent charges.
• International banks and businesses primarily accept debit and credit cards that work with the EMV chip system. If you do not already have at least one debit or credit card with a chip in it, we strongly recommend requesting one from your bank prior to your tour.
• At the conclusion of your tour, it’s customary to offer your Tour Director and driver a gratuity in local currency. Please keep current exchange rates in mind.
• We recommend tipping the equivalent of $8USD to $10USD per person per day for your Tour Director and the equivalent of $3USD per person per day for your driver.
• If applicable, we also recommend the equivalent of $2USD per local guide.
• Tips can only be paid in cash.
• Most optional excursions will be available for purchase while you are on tour.
• Your Tour Director will only accept cash (in USD only), Visa, or MasterCard as payment for excursions.
• Please be advised that if you pay for an excursion by credit card while on tour, it may take up to three months for your card to be charged.
• Some optional excursions may only be purchased in advance. See page four of your tour itinerary for more information.

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4.6 out of 5 stars

4.5 out of 5 stars

Barcelona, Ibiza & Valencia

Imagine the sound of azure waves crashing on a peaceful beach. The thumping of the bass in a world-famous nightclub. The hustle and bustle of a boulevard marketplace. Do you hear it? That’s the Spanish coast, and it’s calling your name.

Picture yourself

Soaking in the architectural artwork of La Sagrada Familia

Lounging in the Ibiza sun on a luxury catamaran cruise

Stopping to smell the roses at Parc Guell

Searching for souvenirs in Old Town Valencia

Unleashing your inner foodie over tapas and sangria

What you'll get

Round-trip flights & airport transfers (or book 'em yourself)

8 nights in handpicked accommodations

8 breakfasts

Expert Tour Director

24/7 Support

2 insider tours with a local guide

Entrance to Parque Guell

Board your overnight flight to Spain, home of all-night fiestas, incredible food, and naps after lunch. Get some shut-eye because your life is about to get loco.

Welcome to Barcelona, a city of endless parties, wacky architecture, and premium beaches—which also happen to be where the clubs are. So throw on your walking shoes, your party pants, and any shirt you’d like. Barcelona is the fiesta that keeps on fiesta…ing.

In the evening, enjoy a Welcome Dinner of local cuisine and drinks with fellow travelers at an authentic local spot. Afterwards, you’re free to take the party elsewhere!

Today's highlights:

• Meet an EF representative at the airport.
• Transfer to your accommodation and check in.
• Receive the latest schedule from your Tour Director.
• Meet your fellow travelers as they arrive.

Experience Barcelona’s unique architecture and atmosphere with a local guide as you wander the city’s enchanting streets. This historic city is home to nine UNESCO World Heritage Sites, seven of which were built by Gaudí (he’s kind of a big deal around here). Take in the impressive sites, and understand why Barcelona is the only city to receive a Royal Gold Medal for architecture—the buildings are basically art.

• Explore the Gothic Quarter with your guide. Don't forget your black eyeliner.
• Visit one of Antoni Gaudí's greatest work of modernist art, Parque Güell. This colorful park is adorned with tilework, dreamlike structures and not a straight line in sight.
• See the 1992 Olympic Park which lines the Mediterranean Sea.
• Take the evening to revisit any of the sights, hit the beach, or explore on your own.

Antoni Gaudí’s Sagrada Família Basilica is the world’s most unbelievable church—under construction since 1882, finished by 2026 at the earliest. Tour it with a local guide, then enjoy included Sangria and pintxos, which are small finger snacks popular in Spain. This excursion is  pre-book  only; if your trip is less than 30 days away, please call 800-766-2645 to purchase.

The day is yours to experience Barcelona as you please. Whether that means exploring a new neighborhood, lounging on a beach, or kicking back with some tapas and a pitcher of sangria, you really can’t go wrong.

• Use your free day to explore more of the city with your fellow travelers.
• Enjoy a free day to kick back, relax with a pitcher of sangria, and enjoy the beautiful weather.

Free time suggestions

Market Down: Visit La Boqueria, the famous market just off of Las Ramblas, with everything from fresh fruits to meats, flowers and sweets. Playa Long: Barcelona’s coast is lined with beaches, each with its own personality. Try party-centric Barceloneta, tranquil Caldetes or water sports at Mar Bella.

Wave goodbye to Barcelona, stuff some tapas in your pockets for safe-keeping, and pop on your sunglasses. You’re headed to Ibiza! Where the sun is almost always shining, and the party literally never stops.

• Board your morning plane from Barcelona to Ibiza. It’s a quick flight, barely even one whole podcast long.
• Arrive at your accommodation, and get ready for non-stop dancing, gorgeous beaches, and nightlife that is unrivaled.
• Get the lay of the land on a walking tour of the island—it’s kind of unfair that Ibiza got all of the beauty and all of the fun of the Balearic Island family.
• Keep an eye out for mermaids—legend has it that Ibiza is home to the mythological sirens that tried to lure Odysseus from his ship in Homer’s Odyssey .

Enjoy a free day in Ibiza to explore the beaches, the old town, or choose to keep the party going on a luxury catamaran in Ibiza’s crystal-clear waters.

Ibiza Coast Catamaran Cruise (extra cost)

You didn’t really think you’d go all the way to Ibiza and not rent a boat for the day, did you? Hop aboard to soak up the sun and set the onboard dance floor on fire. Why wait? Save money by booking this optional excursion before your trip departs.

Good morning, Ibiza! The settlers of this piece of paradise dedicated the island to the god of music and dance, so it’s only fitting that the island is now a hotspot for all DJ-, club-, and dance party-related things. Apart from being all about that bass, Ibiza is overflowing with vibrant nature. The island has 57 different beaches, and was named a UNESCO World Heritage Site for it’s top-of-the-line shores and sea life.

• Wake up again in beautiful Ibiza, and take a few minutes to convince yourself this isn’t a dream.
• Consider investing in some of those gel shoe inserts in order to be the Most Chill person on the dance floor tonight.
• Take the afternoon to explore on your own, or head to the beach with your group.
• Brace yourself—you’re about to have another loco day in Ibiza, in all the best ways.

Uptown Traveler: Walk up to Dalt Vila, a grand fortress that sits above the town, filled with winding cobblestone streets and quaint charm that’ll have you stepping back into history. Sundowners: When the sun goes down in Ibiza, Café del Mar and Mambo are the places to be. With a drink in hand and the sunset in front of you, it really doesn’t get better than this.

Your time in Ibiza has come to an end. But never fear, because you’re on your way to the coastal city of Valencia, the third largest city in Spain, home to thousands of years of history, and a zoo where they let you walk around in the freakin’ animal habitats. Take a moment upon arrival to walk down to the beach and stare longingly in the direction of Ibiza. We’ll wait. All set? Okay! It’s Valencia time.

• Enjoy a scenic ferry ride from Ibiza back to the coast of Spain.
• Sniff out some paella—the iconic dish of rice, spice, and everything nice was invented in Valencia.
• Forget everything you learned in Spanish class—er, actually, maybe just expect to hear both Spanish and Valencian.

Think of a year. Now think of an older year. Now think of 138 BC. That’s when Valencia was founded by the Roman Empire. Today’s your last day to hang out in this old, old outpost and you better believe you’re going to spend it on the beach. Relax, tan, splash, and reminisce about the week you just had. Then, dig in to a farewell dinner with your fellow travelers.

Farewell Dinner Share some last laughs (and maybe shed a few tears) at an included farewell dinner with the group.

• Prepare yourself for a lifetime of saying things like “yeah these tapas are good, but it’s not the same as they were in Spain.”
• Head to some of Valencia’s most picturesque beaches, like La Malvarrosa, a local favorite that we would 10/10 recommend checking out.
• Get some tan lines for your tan lines—just to make sure all your friends know you went on vacation.
• Take advantage of one final night of the ridiculously fuego nightlife Valencia’s Barrio del Carmen neighborhood has to offer.

¡Adiós, amigos! Translation: Goodbye friends. Your next destination awaits—home. Before you head to the airport, enjoy your last few moments together. Take one more group photo. Grab that final drink. (Fine, maybe a couple of drinks.) But this isn’t goodbye. It’s “See you later.” The only question is, where?

EXTEND YOUR TRIP 2 WAYS

1. Double the fun A lot of our trips line up back to back! Give us a call—we can help you add another and save big while you're at it.

2. Go ahead or stay behind Extending your trip is easy! During checkout, you'll have the option to fly to (or from) the gateway of your choice for an additional fee. We'll adjust your flights accordingly, but you'll be responsible to take care of your transportation, hotels, and other logistics outside of tour.

Note: Depending on your desired gateways, additional fees may apply.

Barcelona Ibiza Valencia

My trip to Barcelona was AMAZING, my tour guid was sweet and always gave us good spots to go to locally in each city. I made so many friends on that trip, so much s we all booked to go to Greece through EF next year, highly recommend!

First Trip=Awesomeness!!

Amazing trip

This trip was much fun!!! Made some new friends and memories would def take this trip if you can!!!

Spain was beautiful & so much fun. & our TD Sander made everything so seamless. Trip of a lifetime

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Italy, France & Spain

This is that European experience. Explore Roman art and history (and food), dive into the stunning beaches and seaside villages (and food) of the French Riviera, and indulge in the architecture and nightlife (and food) of Barcelona. This is that experience, the one everyone should have.

Picture yourself

Taking that picture at the Leaning Tower of Pisa

Kayaking along the Lake of Sainte Croix

Soaking in the architectural artwork of La Sagrada Familia

Unleashing your inner foodie over tapas and sangria

What you'll get

Round-trip flights & airport transfers (or book 'em yourself)

14 nights in handpicked accommodations

14 breakfasts

1 lunch and 2 dinners

Expert Tour Director

24/7 support from our travel gurus

3 insider city tours with a local guide

Entrance to Parque Guell

Board your overnight flight, bound for Italy. Get ready to eat spaghetti on penne on linguine on fettuccine on gnocchi on ravioli on chocolate gelato (not literally, but maybe literally).

Welcome to Rome, Italy’s capital city that is bursting at the seams with energy. Locals fill the streets, day and night, usually doing something that involves eating or drinking. And how can you blame them when pasta, pizza, gelato, coffee, and wine are everywhere you go? Rome is all big city/ancient ruins, served with a side of spaghetti.

In the evening, enjoy a Welcome Dinner of local cuisine and drinks with fellow travelers at an authentic local spot. Afterwards, you’re free to take the party elsewhere!

Today's highlights:

• Meet an EF representative at the airport.
• Transfer to your accommodations and check in.
• Meet your fellow travelers as they arrive.
• Take a guided tour of some top sights around Rome.

They say all roads lead to Rome, but once you’re there you quickly realize that all roads actually lead to restaurants. Take the morning to satisfy your cravings and sip some espresso, then enjoy a walking tour of Rome.

• Tour the city with a local guide who will show you why Rome is one of the most legendary cities in Europe.
• Experience the heart of ancient Rome with a visit to the Forum, once a hub of activity for the city.
• See the ruins of several Roman temples, including the Temple of the Vestal Virgins.

Rome has a bit of a spooky side. Travel deep underground to catacombs built by early Christians. Then, head to St. Paul’s Basilica. Existing since at least 324 AD, they say St. Paul himself is buried there. Why wait? Save money by booking this optional excursion before your trip departs.

Mama mia, a whole day in Rome to do as you please! Explore some of your favorite places form the past few days, look for something new, or do as Lizzie McGuire did and fall in love with a local pop star who says you look exactly like his ex-singing partner. And if none of that sounds appealing, join the Vatican City excursion and catch a glimpse of the most interesting cities you’ve ever seen.

• Head to the nearest Italian café for a cappuccino—it’s how the locals do.
• Carpe all of the diem and make the most of your last day in Rome.
• Cross another country of your list (Vatican City is an independent nation).

Free time suggestions

Trevi Fountain: Rumor has it, if turn your back to the Trevi Fountain and toss a coin over your shoulder, it guarantees you’ll return to the Eternal City. Throw in a second coin, and you’ll not only come back, but also find love. Fine print: Significant other not guaranteed by EF Ultimate Break. Shopping on Vide del Corso Walk down the longest pedestrian street in the city for some prime shopping. Populated by both locals and tourists, there’s room for everyone on the narrow store-filled street.

A Visit to the Vatican (extra cost)

Visit the Pope’s house: Vatican City. Take a guided tour of the Vatican Museum and St. Peter's Basilica, and get your dose of art history up close and personal—viewing Michelangelo's famed Sistine Chapel frescoes. Please note: The Vatican is closed on Sundays. In the event that the itinerary day containing this optional lands on a Sunday for your departure, the optional will take place the day before. This excursion is  pre-book  only; if your trip is less than 90 days away, please call 800-766-2645 to purchase. This excursion is also non-refundable 95 days prior to departure.

Travel to Florence via Orvieto. Goodbye bustling city, hello Tuscan countryside. Florence was king during the Renaissance, and it still holds on to that artsy, fashionable, cultural vibe today.

• Board your private coach, bound for Florence.
• Stop in Orvieto, a quaint Italian hill town perched atop a rock cliff.
• Marvel at the artistry of the facade of Orvieto’s stunning cathedral, built in 1290 (no, that’s not a typo—it’s really that old).
• Arrive in Florence and begin exploring.

You’ve got a full day in Florence, the compact capital of the Tuscany region known for its quaint, cobblestone streets and impressive artwork from Renaissance geniuses like Michelangelo and Donatello. Throw on some comfortable shoes and join a local guide for a walking tour of the city. By the end of it, you’ll be looking up how to live in Italy forever.

*Note: There is no included entry to the Duomo during the guided sightseeing on this day, but you will have free time to return if you so choose.

• Cross the Ponte Vecchio, the oldest bridge in Florence, home to many of Florence’s jewelers and art merchants. Ready to get some bling?
• Stroll the Piazza della Signoria, home to Florence’s seat of power, the Palazzo Vecchio, as well as several intricate sculptures.
• Visit the Duomo Cathedral. Return during your free time and challenge yourself to climb the 463 steps to the top for stunning views of the city.

Get Some Fresh Air: Loggia dei Lanzi is an open air sculpture museum, with a number of Renaissance statues. It’s beautiful, it’s in the open, and it’s free. Leather-Bound Books Florence is known for its plethora of leather goods, from belts and jewelry to purses and wallets. Maybe you can finally buy that leather jacket you’ve always wanted but didn’t think you could pull off. Fun fact: you can.

Tuscan Wine Tasting (extra cost)

Some of the world’s best wine come from Tuscany, and you get to sample some at a scenic winery. Next head to the medieval walled town of San Gimignano, home to the world-famous Gelateria di Piazza gelato shop. Why wait? Save money by booking this optional excursion before your trip departs.

The Italian Riviera. Even the name sounds beautiful. This coastal slice of Italy pulls travelers from all over the world to its stunning beaches, quaint towns, and an authentic—and literal—taste of la dolce vita (the sweet life). Before you reach the coast, you’ll stop for a chance to see one of the most famous, most crooked, and most photographed monuments: The Leaning Tower of Pisa.

• Travel through Italian countryside to the town of Pisa, where the famous tower leans as it has since the 12th century.
• Pose, pretending the tower is ice cream or that it’s falling on you—everybody’s doing it.
• Arrive to your accommodations in the Italian Riviera.
• Head out on your own for dinner, drinks, and maybe another dinner (not unlikely with food this good).

You’ve settled in to the Riviera lifestyle. Now take the day to explore everything the region has to offer. Bask in the sun on the beach, fill your camera roll with breathtaking photos, or walk through open-air markets. Nothing is off the table today—except for boredom.

• Wake up, grab an espresso, and head out for an entirely free day in Italian paradise.
• Pick a hike, any hike for some fresh air and views of classic Italian countryside like you’ve never seen.
• Opt in for an excursion to Cinque Terre, where more beauty and more relaxation await you.

Cinque Terre (extra cost)

Note: This excursion is seasonal. Availability is subject to your tour’s departure date. Lay your eyes on the most beautiful coastal scenery anywhere, Cinque Terre. Discover mountainside villages, iconic colorful seaside buildings, and spend the rest of your day enjoying the pebble beaches of Monterosso. Why wait? Save money by booking this optional excursion before your trip departs.

Check another country off your list—Monaco, the world’s second-smallest (but possibly swankiest) nation! This country is home to the Monaco Yacht Show, where millionaires and billionaires come together in harmony to throw money at mega-yachts. In 2017, the combined total value for the yachts on sale exceeded $3 billion. After letting that sink in, continue on to see more of the French Riviera.

• Play millionaire at a stop in Monaco.
• Feel closer than ever to Elton John, Bono, and Bill Gates (just a few of the celebs with homes in the French Riviera).
• Wander through local food markets, where you can look at food, take pictures of food, and yes—eat food.

Ready for a full day in Côte d'Azur (that’s what the French call the Riviera)? Trick question! The answer is always yes. Because this place is beautiful. Sundrenched beaches, historic central squares, and, of course, more food await you on this full-day Riviera adventure.

• Visit several French Riviera towns over the course of one extraordinary day.
• Keep your camera out for endless photo-ops along the way.

Sleep in, slow down, and do whatever you want during a free day in the French Riviera. There’s so much to see and do, but if you’re tired of seeing and doing, take a break and relax at one of the many beaches or take in the scenery from a hill town.

• Enjoy waterfront restaurants, lounge on world famous beaches, explore posh boutiques, and feel like an A-Lister (kind of), because you’re in the vacation hotspot of the world’s rich and famous.
• Taste-test some local favorites, including socca, the South of France’s take on the traditional crepe. Step aside, Parisian pastries!
• Channel your inner Picasso (the famous painter who did not cut off his ear) and visit a few esteemed art museums and demonstrations—you’re in the former stomping grounds of many influential artists.

It’s on to Provence, where scenic countryside inspired artists likes Vincent Van Gogh and Pablo Picasso. The vineyards are vast, and the ratatouille (vegetable stew) delectable. But first, stop at Verdon Gorge river canyon for some lunch and water activities. Look around—what you see is no mirage. But it is paradise.

• Catch stunning views of Verdon Gorge from (included) pedal boats or kayaks on the Lake of Sainte Croix.
• Upon arrival, check in to your hotel and explore this seaside town with your Tour Director
• Hunt for lavender fields that will leave you breathless—and make your nose happy.

You’re going to Barcelona, a city of endless parties, wacky architecture, and premium beaches (which also happen to be where the clubs are). So throw on your walking shoes, your party pants, and any shirt you’d like. Barcelona is the fiesta that keeps on fiesta…ing.

• Take an introductory walk of Barcelona with your Tour Director. (Stopping for tapas is not required, but highly encouraged.)
• Stroll Las Ramblas, the main pedestrian thoroughfare lined with bars, cafes, shops, and street performers (some more impressive than others).
• Stop in Plaça de Catalunya, the city center where old meets new, and pigeons fly next to you, above you, and maybe even through your legs.

Barcelona is so well known for its architecture, we decided to dedicate a whole day to showing you the best of it. You’ll follow a local guide by coach and foot through several neighborhoods, all with their own unique flavor. You’ll visit a church that’s been under construction since before your great-grandparents were born, a colorful ceramic salamander welcoming you into a park, and a stadium where really athletic people from around the world competed for the gold in 1992.

• Explore the Gothic Quarter with your guide. Don't forget your black eyeliner (cue crickets).
• Visit one of Antoni Gaudí's greatest work of modernist art, Parque Güell. This colorful park is adorned with tilework, dreamlike structures and not a straight line in sight.
• Head up to Montjuïc, a hill overlooking Barcelona where the 1992 Olympic Games took place (and where you’ll be out of breath from walking up said hill).
• Check out the unfinished Sagrada Familia cathedral, where Gaudí began construction over 100 years ago.

OverARCHing Theme: The Arc de Triomf was built as the main entrance for the 1888 Barcelona World Fair. While it may remind you of a different (perhaps more famous) arch, it can certainly, shall we say, stand on its own. Comer Little Closer: From paella, a traditional rice dish, to Basque-style tapas, Barcelona has gastronomy locked down. Head out on the town and look for some good eats.

Sagrada Familia & Sangria (extra cost)

Antoni Gaudí’s Sagrada Família Basilica is the world’s most unbelievable church—under construction since 1882, finished by 2026 at the earliest. Tour it with a local guide, then enjoy included Sangria and pintxos, which are small finger snacks popular in Spain. This excursion is  pre-book  only; if your trip is less than 30 days away, please call 800-766-2645 to purchase.

Barcelona is one of the most vibrant cities in Europe, and there’s usually some sort of festival, event, or celebration happening on any given day. Find it. This is your last day to experience as much of it as you can. Even if there’s nothing going on, you’re guaranteed to find something exciting. Whether it’s a restaurant to consume more tapas, a new neighborhood to explore, or a funky building to admire that’s not Gaudí’s design.

• Head back to Las Ramblas for food, shopping, and Instagram opportunities aplenty.
• Drool before, during, and after eating pan con tomate, or “bread with tomato,” a simple but delicious Catalan snack.
• Hit the town (or the beach) for an epic final night out in Barcelona.

Market Down: Visit La Boqueria, the famous market just off of Las Ramblas, with everything from fresh fruits to meats, flowers and sweets. Playa Long Barcelona’s coast is lined with beaches, each with its own personality. Try party-centric Barceloneta, tranquil Caldetes or water sports at Mar Bella.

Farewell dinner Share some last laughs (and maybe shed a few tears) at an included farewell dinner with the group.

¡Adios, amigos! Translation: Goodbye, friends. Your next destination awaits—home. Before you head to the airport, enjoy your last few moments together. Take one more group photo. Grab that final drink. (Fine, maybe a couple of drinks.) But this isn’t goodbye. It’s “See you later.” The only question is, where?

EXTEND YOUR TRIP 2 WAYS

1. Double the fun A lot of our trips line up back to back! Give us a call—we can help you add another and save big while you're at it.

2. Go ahead or stay behind Extending your trip is easy! During checkout, you'll have the option to fly to (or from) the gateway of your choice for an additional fee. We'll adjust your flights accordingly, but you'll be responsible to take care of your transportation, hotels, and other logistics outside of tour.

Note: Depending on your desired gateways, additional fees may apply.

A blast! A definite must if you like the Rivieras and the Mediterranean Coast!

Fantastic experience all around! This was one of the trips that I wanted to do for the longest time, and I think this specific trip was one of the better ones provided by EF. If you like the Mediterranean coast and the Rivieras, then this trip is a definite must. I just wish that there were more trip options in the month of October and in the fall in general... See more

Italy, France, and Spain

I had the best time on my trip! EF allows me to just show up and enjoy myself while they do all the planning. The tour guides are always so personable and fun and always go out of their way to help give us the best experience!

Prepare yourself to have new friends! even if you aren't social. Definitely recommend this trip, just book it. you won't regret it !

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Disinflation in the euro area: an update

Speech by philip r. lane, member of the executive board of the ecb, at the university college dublin economics society.

Dublin, 15 April 2024

My aim today is to review the recent evolution of inflation in the euro area, together with the implications for monetary policy. The ECB has held the main policy rate (the deposit facility rate) at 4.0 per cent since last September. At last week’s Governing Council meeting, we indicated that, if our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase our confidence that inflation is converging to our target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction. [ 1 ]

Chart 1 shows the evolution of headline and core inflation since 2019 [ 2 ] . Let me focus on the disinflation patterns since August 2023. Inflation stood at 5.2 per cent last August and has subsequently declined to 2.4 percent in March. Energy inflation has moved from -3.3 per cent last August to -1.8 per cent in March; food inflation has declined from 9.7 per cent to 2.7 per cent; and core inflation has fallen from 5.3 per cent to 2.9 per cent. Looking at the individual subcomponents of core inflation, there has been a reduction in goods inflation from 4.7 per cent to 1.1 per cent, and in services inflation from 5.5 per cent to 4.0 per cent.

Headline inflation and core inflation

Annual percentage changes

Sources: Eurostat. Notes: HICP refers to headline inflation and HICPX to HICP excluding food and energy. The latest observations for HICP and HICPX are for March 2024 (flash).

In terms of the array of underlying inflation measures tracked by the ECB, Chart 2 shows the evolution of the refined versions of these measures, which adjust for the dynamic impact of energy shocks and supply bottlenecks. [ 3 ] The improvements in these measures since August 2023 suggest that the observed disinflation has a substantial persistent component. At the same time, there has been much less progress in relation to domestic inflation compared to broader inflation measures, reflecting the higher sensitivity of domestic inflation to local cost pressures. As captured in Chart 3, the overall disinflation rate largely reflects the unwinding of the supply shocks that were the primary source of the inflation surge in 2021-2022.

Adjusted measures of underlying inflation

Sources: Eurostat and ECB staff calculations. Notes: HICP refers to headline inflation, HICPX to HICP excluding food and energy, HICPXX to HICP excluding food, energy, travel-related items and clothing, and PCCI to Persistent and Common Component of Inflation. The “adjusted” measures abstract from energy and global supply bottleneck shocks using a large SVAR, as explained in Bańbura, M., Bobeica, E. and Martínez Hernández, C. (2023), “ What drives core inflation? The role of supply shocks ”, Working Paper Series , No 2875, ECB. The latest observations are for March 2024 (flash) for HICPX, HICP excluding energy and HICP excluding unprocessed food and energy, and February 2024 for the rest.

Sources of annual price inflation in the euro area

Annual percentage changes and percentage point contributions

Source: ECB calculations based on Arce, A., Ciccarelli, M., Kornprobst, A. and Montes-Galdón, C. (2024), “ What caused the euro area post-pandemic inflation? ”, Occasional Paper Series , No 343, ECB. Notes: The figure shows a decomposition of the sources of annual HICP inflation between the first quarter of 2020 and the fourth quarter of 2023 based on the solution of the full model and the implied impulse response functions. The continuous line shows actual inflation, and the total net heights of the bars are the model’s forecast of inflation in each period, given initial conditions up to the fourth quarter of 2019. The contributions of the residuals are computed as the difference between actual and simulated data. The dark blue portion of each bar shows the contribution of pre-2020 data. The coloured segments of each bar show the general equilibrium, fully dynamic contribution of each exogenous variable to inflation in that period, as implied by the estimated model. Shocks to the rate of change of the relative price of energy and food are constructed as deviations in the values of those variables from zero. Shocks to the shortages variable are constructed as deviations in the values from the sample mean. Shocks to the vacancy-to-unemployment ratio (labour market variable) are constructed as the actual value minus the value in the fourth quarter of 2019.

The role of monetary policy in the disinflation process has been to ensure that the large and persistent but temporary inflation shocks did not mutate into an increase in the medium-term inflation trend through the de-anchoring of inflation expectations. Since 2022, the central tendency distribution of longer-term inflation expectations has remained largely centred at the two percent target, reflecting the general credibility of the ECB’s commitment to delivering its inflation target. [ 4 ] Since last summer, a range of measures show that near-term inflation expectations have also come down and that the risk of inflation staying above target in the long term has diminished. Charts 4 to 8 shows the evolution of various indicators of inflation expectations and inflation risk: Chart 4 shows the right tail in the distribution of long-term inflation expectations in the Survey of Professional Forecasters has markedly diminished compared to the peak inflation phase in late 2022; Chart 5 shows that the inflation risk premium embedded in five-year-on-five-year inflation swaps has declined by about 40 basis points since last summer; Chart 6 shows that the option-implied probability of above 2.5 per cent inflation in the five-year-on-five-year interval has dropped, while the option-implied probability of below 1.5 per cent inflation has picked up; Chart 7 shows that, according to the Consumer Expectations Survey, households have recognised the improvement in inflation outcomes and marked down their near-term inflation expectations; finally, Chart 8 shows that, according to the results from the survey on the access to finance of enterprises (SAFE), firms have lowered their near-term inflation expectations, while the proportion of firms that fear high inflation in the medium term has decreased. [ 5 ]

Survey of Professional Forecasters (SPF): distribution of longer-term inflation expectations

Percentage of respondents

Sources: SPF and ECB calculations.

Notes: The vertical axis shows percentages of respondents; the horizontal axis shows the HICP inflation rate. Longer-term expectations refer to 4-5 years ahead. The latest observations are for SPF for the second quarter of 2024.

Decomposition of five-year-in-five-year inflation-linked swap (ILS) rate

Sources: Bloomberg and ECB calculations.

Notes: Premia-adjusted forward ILS rates are average estimates from two affine term structure models as in Joslin, Singleton and Zhu (2011) applied to ILS rates non-adjusted for the indexation lag; see Burban et al. (2022), Economic Bulletin , Issue 8, ECB, Box 4. The latest observations are for 11 April 2024.

Option-implied probabilities of inflation outcomes

Percentages

Sources: LSEG, Bloomberg and ECB calculations.

Notes: Five-day moving average risk-neutral probabilities of inflation implied by five-year and ten-year zero-coupon inflation options. The depicted probabilities are risk-neutral probabilities affected by risk premia and should therefore not be interpreted as “real world” (or physical) probabilities. The latest observations are for 11 April 2024.

ECB consumer expectations survey

Source: ECB Consumer Expectations Survey (CES).

Notes: The series refer to the median value. The latest observations are for February 2024.

Firms’ expectations about euro area inflation at different horizons

Percentages per annum

Sources: Survey on the access to finance of enterprises (SAFE) and ECB calculations. Notes: Survey-weighted median, mode and interquartile ranges of firms’ expectations about euro area inflation in one year, three years and five years respectively. Quantiles are computed by linear interpolation of the mid-distribution function. All enterprises. The latest observations are for March 2024.

The lowering of perceived inflation risk is plausibly connected to the faster-than-expected decline in inflation in recent months, which has provided reassurance that inflation would not remain too far away from target for too long. This is captured in Chart 9, which shows the evolution of the projected 2024 inflation rate over the September, December and March projection rounds. Chart 10 also shows the downward revisions to the 2024 growth rate over these projection rounds.

Inflation in 2024

Source: ECB and Eurosystem staff projections.

Real GDP growth in 2024

Despite the overall disinflation trend, services inflation remains high at 4.0 per cent. The decline in services inflation since last summer has largely been in non-labour-intensive services sectors, reflecting the indirect impact of lower energy prices, the easing of supply bottlenecks and the fading out of pandemic reopening effects on these sectors. As shown in Chart 11, there is a relatively tight medium-term relation between wage inflation and the inflation rate for labour-intensive services sectors (which make up a large part of the domestic inflation component). Over time, deceleration in wage growth is necessary in order for services inflation to converge to a rate that is consistent with meeting the two per cent target for overall inflation.

Services inflation developments

Sources: Eurostat and ECB calculations. Latest observations are for the fourth quarter of 2023 for compensation per employee, March 2024 (flash) for services inflation and February 2024 for the rest.

Wage pressures are gradually moderating but remain elevated compared to a steady-state benchmark. As shown in Chart 12, annual growth in compensation per employee decelerated in the fourth quarter of last year to 4.6 per cent, from 5.1 per cent in the third quarter. Growth in compensation per hour also slowed, falling in annual terms to 4.4 per cent in the fourth quarter from 5.0 per cent in the third quarter. The wages and salaries component of the labour cost indicator decreased to 3.3 per cent in the fourth quarter from 5.1 per cent in the third quarter. Annual unit labour cost growth fell to 5.8 per cent, from 6.5 per cent, but remained high, in part reflecting weak productivity growth. Negotiated wage growth including one-off payments also declined further, falling to 3.2 per cent in January from 4.8 per cent in December, although this figure does not yet include the data for France and Italy.

Labour cost indicators

Sources: Eurostat, ECB and ECB staff calculations. Notes: The labour cost index refers its wages and salaries component. The latest observations are for the fourth quarter of 2023.

As shown in Chart 13, forward-looking wage trackers also continue to provide signs of easing. As shown in Charts 14 and 15, the feedback from firms participating in the Corporate Telephone Survey (CTS) and the SAFE point to lower wage growth this year. The March projections foresee subsequent phases of further wage deceleration in 2025 and 2026, with the growth rate of compensation per employee declining from 5.3 per cent in 2023 to 4.5 per cent in 2024, 3.6 per cent in 2025 and 3.0 per cent in 2026.

Wage trackers

Sources: ECB, national central banks, Central Band of Ireland and the Dutch employer association (AWVN). Notes: Euro area aggregate based on Germany, France, Italy, Spain, Netherlands, Austria and Greece. The indicator "average of agreements signed in last quarter including one-offs" displays the average growth rate of contracts signed in a given quarter in the first four quarters of signing. One-off payments are spread over the 12 months from the disbursement date. The latest observations are for the first quarter of 2024 (preliminary) for the latest agreements, and March 2024 for the wage trackers.

CTS wage expectations

Number of responses

Sources: ECB and April 2024 Corporate Telephone Survey (CTS). Note: 54 responses for 2023 and 53 responses for 2024.

SAFE wage expectations for one year ahead

Percentage changes over the next 12 months

Sources: Survey on the access to finance of enterprises (SAFE) and ECB calculations. 

Notes: Survey-weighted mean euro area firm expectations of changes in wages of current employees. Computed after trimming at the wave-country-specific 1st and 99th percentiles – all enterprises. The latest observations are for March 2024.

In addition to wage growth deceleration, the convergence of inflation to the target also requires compression in profits. As reflected in Chart 16, annual growth in unit profits decelerated further in the fourth quarter, falling to 2.8 per cent from 4.7 per cent in the third quarter. This significant decline was the main driver of the reduction in the annual growth rate of the GDP deflator, which fell by 0.6 percentage points to 5.3 per cent. As embedded in the March projections exercise, further compression in profits is required to support the convergence of inflation to the target, and a sufficiently restrictive monetary policy stance is necessary to provide the dampened demand conditions to limit the pass-through of rising costs to consumer prices.

GDP deflator

Sources: Eurostat and ECB calculations.

Notes: Unit taxes reflect taxes minus subsidies. When the contribution of subsidies on products is larger than the contribution of indirect taxes, the unit tax contribution turns negative. The latest observations are for the fourth quarter of 2023.

In monitoring the transmission of the monetary policy stance, Chart 17 records the policy rate time series (together with the market-priced forward path) and Chart 18 the contraction in the Eurosystem balance sheet; Chart 19 depicts the evolution of the risk-free yield curve; Chart 20 plots bank lending rates for firms and households; Charts 21 and 22 report credit standards for firms and households; finally, Charts 23 and 24 report credit volumes for firms and households.

€STR forward curve and deposit facility rate (DFR); APP, PEPP and TLTROs

Note: The latest observation is 11 April 2024.

APP, PEPP and TLTROs

Trillion euros

Sources: ECB calculations.

Note: Purchase programmes are based on book value at amortised cost. The latest observation is 5 April 2024.

Euro area Overnight Index Swap (OIS) yield curve

annual percentages

Sources: Bloomberg and ECB calculations. Notes: The curves refer to 21 April 2021, 15 December 2021, 14 December 2022 and 11 April 2024 respectively. The latest observations are for 11 April 2024.

Lending rates for new and outstanding amounts: firms and households for house purchase

percentages per annum

Source: ECB (MIR).

Notes: Interest rates on new business volumes refer to the indicator for the total cost of borrowing for firms and households for house purchase, which is calculated by aggregating short-term and long-term rates on new business using a 24-month moving average of new business volumes. The latest observations are for February 2024.

Change in credit standards and demand for loans to firms, and contributing factors

net percentages of banks

Source: ECB (BLS).

Notes: Left panel: “Other factors” refer to further factors mentioned by banks as having contributed to change in credit standards. Right panel: “Other financing needs” is the unweighted average of “M&A and corporate restructuring” and “debt refinancing/restructuring and renegotiation”; “Use of alternative finance” is the unweighted average of “internal financing”, “loans from other banks”, “loans from non-banks”, “issuance/redemption of debt securities” and “issuance/redemption of equity”.

The latest observations are for the first quarter of 2024.

Change in credit standards and demand for loans to households for house purchase, and contributing factors

Notes: Left panel: “Other factors” refer to further factors mentioned by banks as having contributed to change in credit standards. Right panel: “Other financing needs” is the unweighted average of “debt refinancing/restructuring and renegotiation” and “regulatory and fiscal regime of housing markets”; and “Use of alternative finance” is the unweighted average of “internal finance of house purchase out of savings/down payment”, “loans from other banks” and “other sources of external finance”. The net percentages for “Other factors” refer to an average of the further factors which were mentioned by banks as having contributed to changes in loan demand.

Net debt financing flows of euro area firms

left scale: average monthly flows, in EUR billions; right scale: annual percentage changes

Sources: ECB (BSI, CSEC) and ECB calculations.

Notes: The net issuance of debt securities is seasonally adjusted internally. Bank loans to firms are adjusted for sales, securitisation and cash pooling. The latest observations are for February 2024.

Bank loans to households

Sources: ECB (BSI) and ECB calculations.

Notes: Bank loans to households are adjusted for sales and securitisation. The latest observations are for February 2024.

Finally, it should be recognised that the current phase of disinflation is necessarily bumpy. In particular, the swings in energy prices during 2023 will generate oscillations in base effects in the monthly inflation readings, while the staggered reversal of various temporary fiscal supports will also operate on the price level in an uneven manner. Chart 25 plots a range of indicators of near-term inflation dynamics and the projected quarterly evolution of headline and core inflation according to the March projections. Headline inflation is expected to fluctuate around current levels in the near term on account of base effects in the energy component and the reversal of the upward effect of the early timing of Easter on services inflation in March. While services inflation should decline somewhat in the near term, it is expected to remain relatively elevated for most of this year.

Short-term forecasts for HICP (left) and HICPX (right)

Sources: Eurostat, March 2024 ECB staff macroeconomic projections for the euro area, Consensus Economics, Bloomberg and ECB calculations.

Notes: The cut-off date is 3 April 2024 for the regression forest and 11 April 2024 for fixings. Consensus Economics data were collected on 8 April 2024. The quantile regression forest estimates are from Lenza, M., Moutachaker, I. and Paredes, J. (2023), “ Density forecasts of inflation: a quantile regression forest approach ”, Working Paper Series , No 2830, ECB. The HICP fixings are observed market prices. The HICPX fixings are estimated based on the model in Grønlund, A.M., Jørgensen, K. and Schupp, F. (2024), “ Measuring market-based core inflation expectations ”, Working Paper Series, No 2908, ECB. The latest actual observation is for March 2024 (flash).

Even if the near-term inflation outlook is somewhat bumpy, the projected convergence of inflation to the target in 2025 will be underpinned by: the lowering of labour cost pressures; some additional compression of unit profits; the dissipation of the adverse effects of past energy shocks, supply bottlenecks and the pandemic re-opening; and the further unfolding of the disinflationary impact of the restrictive monetary policy stance. This disinflationary dynamic is consistent with both inflation stabilising at our target in 2025 and a substantial economic recovery, with rising real incomes and improvements in the terms of trade, together with the prospect of dis-inflation unlocking future interest rate reductions, boosting domestic consumption and investment, while the normalisation of foreign demand will facilitate growth in exports.

This review of the disinflation path in recent months and the analysis of the drivers of inflation over the projection horizon indicate that, based on the three elements of our reaction function we can conclude that the key ECB interest rates are at levels that are making a substantial contribution to the ongoing disinflation process. Our future decisions will ensure that our policy rates will stay sufficiently restrictive for as long as necessary. If our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase our confidence that inflation is converging to our target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction. In informing this assessment, the June Governing Council meeting will benefit from updated staff projections and the accumulation of data about the dynamics of wages and profits in the opening months of this year. In any event, we will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction, and we are not pre-committing to a particular rate path.

On navigating the transition from the “holding” phase to the “dialling back” phase of the tightening cycle of monetary policy, see Lagarde, C. (2024), “ Building confidence in the path ahead ”, speech at The ECB and its Watchers XXIV Conference, organised by the Institute for Monetary and Financial Stability, Goethe University, Frankfurt am Main, 20 March.

I maintain a narrow focus in this speech on the patterns since August 2023. I recently provided a comprehensive overview of the disinflation process in Lane, P.R. (2024), “ Disinflation in the euro area ”, speech at the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution, Washington, D.C., 8 February.

See M. Banbura, E. Bobeica, K. Bodnar, B. Fagandini, P. Healy and J. Paredes, Underlying inflation measures; an analytical guide for the euro area, Economic Bulletin Issue 5, 2023. While domestic inflation is not to be interpreted as a measure of the underlying rate of aggregate inflation, it is still useful to include it since domestic inflation should be more sensitive to the domestic monetary stance and it tends to be more persistent than the imported component of inflation.

In fact, the inflation surge initially served to “re-anchor from below” inflation expectations at the target: until 2022, a significant proportion of professional forecasters (and market participants) believed that the ECB would not be able to bring inflation up to the target, in view of the effective lower bound constraint.

In terms of their own pricing intentions, firms report that price increases will be lower in 2024 compared to 2023.

European Central Bank

Directorate general communications.

• Sonnemannstrasse 20
• 60314 Frankfurt am Main, Germany
• +49 69 1344 7455
• [email protected]

Reproduction is permitted provided that the source is acknowledged.

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