European Central Bank vice president Luis de Guindos spoke in an interview with UK media, the Sunday Times (gated):

“We need to consider the uncertainty of the current environment, which is even higher than it was during the pandemic.”

“What we’re seeing is that the new US administration isn’t very open to continuing with multilateralism, which is about co-operation across jurisdictions and finding common solutions for common problems. This is a very important change, and a big source of uncertainty.”

De Guindos highlighted:

• real wages have increased
• inflation is declining
• interest rates are declining
• financing conditions are improved

But:

• consumption is not picking up
• consumers are concerned over what might happen with the economy over the medium term, which is clouded in uncertainty, and also the possibility of a trade war, possibility of wider geopolitical conflict

Its too early to draw definite economic conclusions about the EU defense spending plans,

• will likely be positive for growth
• likely to have a limited impact on inflation