The European Central Bank (ECB) stated that uncertainty created by wars and trade friction will continue to weigh on euro zone economic growth this year. However, a shift in business investment towards intangible assets such as artificial intelligence (AI) seems to be mitigating the drag.
Economic Impact
Uncertainty is estimated to have reduced euro zone economic growth by 0.4% between the first quarters of 2025 and 2026 as firms and households curbed spending. Despite this, spending on intangibles seems to be more resilient, and corporate surveys suggest that oversized spending on AI is providing a buffer for an economy that is only seen growing by 1% in 2026.
The ECB noted that the ongoing shift in the composition of investment towards intangibles could act as a gradual stabiliser of the investment cycle, even as uncertainty itself remains a significant driver of macroeconomic fluctuations. Households also curb spending in times of uncertainty, postponing big-ticket item purchases, but the overall drag is relatively small and spending recovers quite quickly after uncertainty eases.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
