European Central Bank Vice President Luis de Guindos warned that geopolitical strife has increased downside risks for the Eurozone economy. Countries heavily reliant on trade or burdened by high public debt face the greatest vulnerability to external shocks.

The 20-nation bloc showed resilience in late 2025, expanding 0.3% in the third quarter. ECB forecasts now project growth above 1% for 2026, supported by steady consumption, services activity, and a firm labor market despite flat industrial output.

De Guindos highlighted that markets appear complacent, pricing in overly optimistic scenarios while ignoring potential disruptions. He cited risks from escalating trade conflicts, AI setbacks, and questions around U.S. fiscal credibility triggering sudden sentiment shifts across asset classes.

To mitigate future vulnerabilities, de Guindos urged deeper European integration and more efficient capital markets. "More Europe, not less," he argued, emphasizing unity as a buffer against global uncertainty and fragmented policy responses.