The euro area faces a “very difficult economic situation” that will test individuals and businesses, European Central Bank Vice President Luis de Guindos said.
(Bloomberg) — The euro area faces a “very difficult economic situation” that will test individuals and businesses, European Central Bank Vice President Luis de Guindos said.
“The high inflation rates that we are seeing across Europe are coinciding with an economic slowdown and low growth,” he told the Spanish Confederation of Young Entrepreneurs’ Associations in a Dec. 16 interview published on the ECB’s website on Tuesday. “It is very important that individuals and businesses alike are prudent and focus on the long term.”
In his remarks, Guindos reiterated messages shared at the Dec. 15 interest-rate decision, including the new economic forecasts published that day. Asked on how high borrowing costs will rise, he repeated the ECB’s mantra that this will be decided “meeting by meeting and on the basis of incoming data.”
Guindos also underscored the view that the euro zone is enduring a “short-lived and shallow recession” before the economy then starts growing again in the second quarter.
“This situation undoubtedly presents a challenge for businesses and their sustainability,” the vice president said. “With a recession on the horizon, the current high uncertainty makes it all the more difficult for businesses and entrepreneurs to distribute their capital. So, against this backdrop, it is very important to be prudent.”
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
