Luis de Guindos, Vice President of the European Central Bank, has warned that the global economy has entered a period of heightened uncertainty after major shifts in US policy.
Trade flows have been disrupted and confidence weakened, with ripple effects across economies, De Guindos said in a speech at the 16th edition of Spain Investors Day, cited by the ECB press service.
He added that geopolitical risks remain elevated and that the multilateral, rules-based system that has supported global trade and international relations has been eroding.
In the euro area, uncertainty is weighing on growth by delaying firms’ investment decisions and encouraging households to save more and spend less, the ECB vice-president said.
Fiscal policy in several euro area countries is also set to ease to accommodate higher spending, including for military and security purposes, he added.
Inflation in the euro area stood at 2.0% in December after hovering within a narrow range since the spring, while core inflation — which excludes energy and food — fell slightly, De Guindos noted.
Energy prices were lower than a year earlier, while strong wage growth continued to push up underlying inflation, he said.
Economic activity in the euro area grew by 0.3% in the third quarter of 2025, mainly reflecting stronger consumption and investment.
Growth was driven by services, while industry and construction were flat, and unemployment was close to its historical low.
Financial stability risks and market pricing
Asset markets remain vulnerable because valuations are stretched in increasingly concentrated markets, while some non-bank financial firms face liquidity and leverage weaknesses, according to the ECB vice president.
He said growing interlinkages between banks and non-banks could expose funding vulnerabilities in stressed conditions, and that private markets, including private equity, were “opaque”.
Market concerns about US fiscal credibility have increased amid persistently high fiscal deficits and have contributed to a steepening of yield curves, De Guindos declared.
He added that financial markets have so far smoothly absorbed high levels of government bond issuance, while warning that some euro area countries’ fiscal fundamentals have also remained weak.
