ECB’s de Guindos: Trade War Extremely Negative Mainly for Growth but Also Inflation

20 December 2024

ECB’s de Guindos: Trade War Extremely Negative Mainly for Growth but Also Inflation
Luis de Guindos, vice president of the European Central Bank, at the ECB Forum on Central Banking in Sintra, Portugal on June 28, 2024. Photo by © Sérgio Garcia/Your Image for ECB under CC BY-NC-ND 2.0.

By Marta Vilar – MADRID (Econostream) – European Central Bank Vice President Luis de Guindos said on Friday that a trade war would have a very bad effect especially on economic growth but on inflation as well.

In an interview with Dutch daily Telegraaf, de Guindos said ‘If a trade war erupts, it would be extremely negative for the world economy, mainly for growth but also for inflation.’

If China were to suffer a 60% tariff on its goods, flows in trade would be disrupted and exchange rates could feel the impact, he said.

‘Nobody knows where that will end’, he said.

Asked about high debt levels in European countries, de Guindos said, ‘France is not the only country whose budget has not yet been approved.’

Member states had to deliver realistic fiscal consolidation plans, he said.

‘Europe is at crossroads now’, he said. ‘The future is now more uncertain than ever since the pandemic due to geopolitical tensions and the risk of significant frictions in global trade in the advent of the new United States administration.’

This meant that it was crucial to have more integration, not less, he said.

 

Related articles: