FRANKFURT, Aug 5 (Reuters) – Uncertainty created by wars and trade friction will continue to weigh on euro zone economic growth this year, but a shift in business investment towards intangible assets such as AI seems to be mitigating the drag, the ECB said on Wednesday.
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, and it will continue to weigh on activity for the rest of the year.
But spending on intangibles seems to be more resilient, and corporate surveys suggest that oversized spending on artificial intelligence so far this year is providing a buffer for an economy that is only seen growing by 1% in 2026.
“To the extent that the ongoing shift in the composition of investment towards intangibles continues, the aggregate response of investment to uncertainty shocks may become more muted over time,” the ECB said in an Economic Bulletin article.
“Such a compositional shift could therefore act as a gradual stabiliser of the investment cycle, even as uncertainty itself remains a significant driver of macroeconomic fluctuations,” the ECB added.
Households also curb spending in times of uncertainty, postponing big-ticket item purchases such as cars, but the overall drag is relatively small and spending recovers quite quickly after uncertainty eases, the ECB added.
Business spending on tangibles normally takes a much bigger hit and remains subdued for quite some time even after the shock, the ECB added.
(Reporting by Balazs Koranyi; Editing by Hugh Lawson)
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