Tariffs could hurt growth, boost inflation for all, Bundesbank chief warns
FRANKFURT, Nov 22 (Reuters) -Europe and the U.S. will both take a growth hit if there is a new trade war and inflation could also rise, increasing pressure on EU leaders to kick start long-delayed economic integration to insulate the bloc, Bundesbank President Joachim Nagel said on Friday.
Nagel joins a long list of policymakers arguing that tariffs proposed by U.S. President-elect Donald Trump are likely to hurt all parties involved, a message that has yet to resonate with the incoming U.S. administration.
"Implementing such tariffs would re-ignite international trade conflicts and further impair our multilateral order," Nagel said in a speech in Frankfurt.
"Combined with other plans, they might inflict significant GDP losses in the United States and abroad," Nagel said. "And they would probably lead to rising inflation rates – on both sides of the Atlantic."
Europe must now come together and subordinate national interests to the common cause, creating an economic framework that protects the European model of prosperity, Nagel argued.
Necessary steps include a true banking union with a joint deposit guarantee scheme and a solution to the “doom loop”, created by the links between sovereigns and banks, Nagel said.
Another necessary step is setting up a true capital markets union, which would channel European savings to firms and regions in the biggest need of capital, Nagel added.
Reporting by Balazs Koranyi
Editing by Mark Potter
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
