ECB’s de Guindos: High Uncertainty Hurting Growth and Threatening Financial Stability

27 May 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Tuesday said that uncertainty was much higher than it had been six months ago and that this was dampening growth and creating financial stability risks.

In an interview with Greek daily Ta Nea, de Guindos said that since last November, uncertainty had ‘increased significantly … mainly because of the abrupt change in US tariff policy.’ Trade negotiations had ‘certainly created uncertainty and volatility’ and were ‘affecting investment, weakening household confidence and reducing the growth prospects of the European economy’, he said.

High market valuations under conditions of high uncertainty could result in disorderly market adjustments, he warned.

Moreover, the negative impact on growth could worsen credit risk, he said.

In addition, higher government spending could lead to worries about fiscal sustainability ‘in some countries’, he said.

De Guindos said he expected the ultimate outcome to involve higher tariffs than existed before US President Donald Trump took office.

‘And we shouldn’t only focus on bilateral tariffs between the United States and the EU – we also need to look at global trade patterns and disruptions’, he said. ‘If China redirects its exports to Europe, for example, the impact will be significant.’