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The European Central Bank (ECB) is expected to cut its deposit rate by 25 basis points to 2.25 percent today. Lena Dräger, an expert on monetary policy, and trade researcher Julian Hinz see the move as a further step toward monetary easing, but are calling for a stronger signal in view of the economic risks to the real economy and financial markets, particularly those arising from the escalating trade policy of the US.

Since the Trump administration took office, US aid to Ukraine has come to a standstill, while Europe has consistently maintained its support, widening the gap in total allocations: The European continent has now allocated EUR 23 billion more than the United States. This is shown in the latest update of the Ukraine Support Tracker, which covers aids until February 2025. Smaller countries like Estonia and Denmark contribute disproportionately relative to their economic size—while larger economies such as Germany, France, and Spain are being called upon to play a more significant role.

The German economy will continue to tread water in 2025. In their spring report, the leading economic research institutes forecast an increase in gross domestic product of just 0.1 per cent for the current year. For 2026, the institutes expect gross domestic product to increase by 1.3 per cent. In the short term, the new US trade policy and economic policy uncertainty are weighing on the German economy. The additional scope for public debt should gradually have an expansionary effect, but threatens to crowd out private consumption and private investment.