Ireland’s Finance Minister, Paschal Donohoe, has warned that economic growth in the EU looks set to be lower than previously expected.
“There is obvious uncertainty with regards tariffs and trade, uncertainty with regard to the security situation in Europe and uncertainty with regard to the impact of all of these developments on growth and investment”, Donohoe, who is also President of the Eurogroup, said last night in Brussels.
Hi warning comes as Europe battles a range of challenges including the threat of tariffs imposed by the US, the continuing war in Ukraine and sluggish economic growth in Germany and elsewhere.
“It is important to highlight that the Euro area economy continues to be remarkably resilient considering all of this”, Donohoe insisted.
But his remarks also highlighted the nervousness amongst his EU counterparts.
“The latest projections show a slightly lower growth profile than was originally expected”, he warned.
A less rosy economic outlook is problematic for Europe trying to find cash to spend on security and defence.
Last week, the President of the European Commission, Ursula von der Leyen, proposed schemes, largely made up of loans, to leverage €800 billion in defence spending.
EU leaders meeting for an emergency summit in Brussels responded that other avenues should also be explored.
“In the context of elevated geopolitical risks, quick and unified policy action is key”, said the EU’s Economy Commissioner Valdis Dombrovskis.
“We need to take more responsibility for our security and defence while improving our competitiveness and economic fundamentals”, he added.
Donald Trump’s tariffs on European steel and aluminum are due to come into force on Wednesday.
But some of the tariffs Trump initially imposed on Canada and Mexico have subsequently been delayed or dropped. The EU is hoping for the same.
Taoiseach Micheál Martin is due to meet Trump in Washington on Wednesday ahead of St Patrick’s Day celebrations later this week.