Uncertainty Holds Back European Economy ‒ Report by AIECE, a Network of European Economic Research Institutes
The AIECE General Report for Spring 2025 highlights weak global growth amid substantial uncertainty driven by geopolitical conflicts and unpredictable US trade policies. Enhancing European competitiveness through investments in sustainability, digital infrastructure, and strategic sectors is seen as essential.
Concerning proposed reactions to US trade policy, nearly half of the respondents support the idea that the EU should join initiatives to reduce the dominance of the US dollar (see Figure 1). Additionally, 40% of respondents recommend that the EU provide targeted support for industries most affected. In contrast, a majority of the surveyed economists oppose proposals to increase market access for American products and to encourage their consumption within the EU.
In light of fiscal expansion plans in Germany and other EU countries, the recent AIECE Questionnaire asked member institutes whether the EU's fiscal rules should be relaxed, and whether increasing public debt is advisable. As shown in Figure 2, a majority of respondents oppose loosening fiscal rules for the purpose of increasing spending on climate protection. However, opinions are divided on whether the rules should be relaxed to allow for greater defense spending.
The Spring 2025 AIECE General Report, authored by Katalin Nagy and Péter Vakhal of Kopint-Tárki Institute (Hungary), offers a comprehensive macroeconomic outlook for the European economy. It also includes detailed assessments from member institutes on key cyclical, policy, and structural issues. Link to the report: www.aiece.org/general-meetings
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