ECB’s Lagarde: Uncertainty May Hold Back Investment Needed for Europe’s Recovery

2 April 2025

By David Barwick – FRANKFURT (Econostream) – Trade tensions are apt to worsen existing problems in Europe, and the heightened uncertainty could hamper an investment-driven recovery, according to European Central Bank President Christine Lagarde late Wednesday.

Receiving an award in Dublin, Lagarde said in her acceptance speech that increased protectionism and supply chain disruption risked ‘compounding existing issues like sluggish productivity growth and weak competitiveness.’

Europe was particularly vulnerable, given the importance to its economy of external trade, she said. ‘On top of this, pronounced uncertainty may hold back the investment necessary for Europe’s recovery’, she said.

Europe was also in potential danger militarily, she warned.

‘We can no longer fully count on the security arrangements that have stood in place since the Second World War’, she said. ‘If a security vacuum should arise, it may encourage opportunism by hostile actors on Europe’s doorstep.’

Still, the situation also represented a ‘tremendous opportunity’, she said. To exploit it, Europe had to ‘work together to simplify and scale up our economy so that we can hold our own in a world dominated by economic giants.’

That implied capital market integration and the dismantling of barriers to the Single Market, she said.