The European Commission proposed the Digital Networks Act (DNA) to modernise, simplify and harmonise EU rules on connectivity networks. The current rules must be updated to create the conditions for operators to invest into rolling out advanced fibre and mobile networks. High-capacity networks enable innovative tech, like Artificial Intelligence and Cloud. The widespread availability of advanced connectivity for people and businesses across the EU is the foundation of Europe’s competitiveness.
Strengthening the single market for connectivity
The proposal aims at creating an effective EU single market by harmonising rules and facilitating cross-border business to incentivise operators to scale up, grow and innovate. To enable this, the Digital Networks Act proposal aims to:

facilitate companies to provide services across the EU while having to register in only one Member State;

incentivise the creation of pan-European satellite communication services by establishing an EU-level, as opposed to national level, spectrum authorisation framework;
increase regulatory consistency in national spectrum authorisation, by giving operators longer spectrum licences and by making licences renewable by default to increase predictability;
ensure that all available spectrum is being used by making spectrum sharing among operators more common (‘use it or share it’); and
introduce a voluntary cooperation mechanism between connectivity providers and other players, such as content application and cloud providers.

Transition to advanced connectivity networks
Legacy copper networks do not fit the ambition of making innovative technologies widely available across the EU. The DNA introduces mandatory national transition plans to ensure the phase out of copper networks and the transition to advanced networks between 2030 and 2035. Member States must present their national plans in 2029. The process is accompanied by safeguards to protect all consumers, such as providing clear and timely information about switch-offs and ensuring service continuity.
Simplification and investment
The Digital Networks Act modernises the regulatory framework, reducing administrative burden and reporting obligations, so companies can focus their resources on investment and innovation. The DNA also allows more flexibility for business-to-business relations, while keeping a high level of consumer protection.
Secure and resilient connectivity
The DNA enhances network security and resilience by limiting dependencies in the connectivity ecosystem and promoting EU-level cooperation. The proposal introduces an EU-level Preparedness plan to tackle the rising risks of crises including natural disasters and foreign interference in networks. In addition, the common mechanism for selecting pan-EU satellite communications will incorporate criteria focused on security and resilience.
Protecting net neutrality in innovative services
The DNA fully keeps the principles of net neutrality. It introduces a mechanism to clarify Open Internet rules for innovative services to increase legal certainty and a voluntary ecosystem cooperation mechanism on IP interconnection, traffic efficiency, and other emerging areas.
Next steps
The proposal will be presented to the European Parliament and the Council for approval.
Background
The DNA proposal will replace the 2018 EU Electronic Communications Code.
In February 2024, the Commission’s White Paper “How to master Europe’s digital infrastructure needs?” aimed to explore scenarios and gather insights to shape policy actions for the Union’s digital infrastructure sector.
In her 2025 State of the Union Address, President von der Leyen stressed advancing the Single Market for connectivity by 2028 and encouraged investment in transformative technologies.
 
 
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In 2025, the European Union Intellectual Property Office received 327 735 new applications for EU trade marks and EU designs. It is the highest annual number of intellectual property (IP) applications since the Office began accepting filings in 1996.
Overall, it represents a 7.8% increase compared to 2024, surpassing the previous record set in 2021 (313 928 applications received)
Trade Marks Drive Overall Growth
European Union trade marks (EUTMs) accounted for the largest share of applications in 2025. The EUIPO received 196 886 EUTM applications, an increase of 9.1% compared to 2024.
Applicants based in EU Member States drove this growth, with filings rising by 9.4%. The 27 EU countries together accounted for over 57.5% of all European Union trade marks applications received. Germany (12.7%), Italy (6.9%) and Spain (6.4%) were the most active countries.
Outside of the EU, applications from China also continued to increase, growing by 13.3% (accounting for almost 16% of all EUTMs). The USA (9%) and the UK (4.2%) complete the top three.
Regarding products and services, ‘advertising and business management’, ‘electrical apparatus’ and ‘technological services’ are among the main ones requested. Followed by ‘education and sporting activities’ and ‘clothing and footwear’.
Together, these trends confirm the continued relevance of the EUTM system for businesses operating both within and beyond the European Union.
Design Filings Reach New Highs
Demand for EU designs (EUDs) also increased in 2025. The EUIPO received 130 849 design applications, marking a 6% rise and the second consecutive year of record-breaking figures.
For the first time, applications from outside the EU accounted for the majority of design filings, representing 52% of all EUD applications.
China emerged as the leading source country in 2025, with filings increasing by 18.4% (accounting for 29.9 % of all EUDs applications received), followed by the United Kingdom (+17.8%) and the United States (+8.4%). These figures underline the growing international importance of the EU design system.
Within the EU, filings were led by Germany (13.4%), followed by Italy (10.5%), Poland (4.2%), France (4%) and Spain (3.4%).
New Competence for Craft and Industrial Geographical Indications
In December 2025, the EUIPO began accepting applications for craft and industrial geographical indications (CIGIs), marking a significant expansion of the Office’s mandate.
Within the first weeks of operation, the EUIPO received 45 CIGI applications, with stones and minerals and textiles as the main products represented.
The new system aims to support local value creation and strengthen competitiveness in regions across the European Union.
Looking Ahead
These results provide a strong starting point for the second year of the EUIPO Strategic Plan 2030.
Sustained growth in filings shows that businesses, innovators and creators worldwide continue to invest in protection through the European Union’s IP system.
The record figures recorded in 2025 confirm confidence in the EUIPO and its role in supporting a modern, resilient and inclusive European innovation ecosystem.
 
Click here to explore the charts and figures.
Disclaimer: These figures are provisional and subject to final confirmation.
 
 

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The Council has adopted today an amendment to the regulation governing the activities of the European High-Performance Computing Joint Undertaking (EuroHPC JU), extending its objectives to facilitate the creation of Artificial Intelligence (AI) gigafactories in Europe and to include a dedicated quantum technologies pillar.
The amended regulation allows for the development and operation of AI gigafactories in Europe, a world-class AI compute infrastructure that will strengthen Europe’s industry and competitiveness, while fostering cooperation through public-private partnerships that include member states and industry stakeholders. It also sets rules for funding and procurement, while safeguarding the interests of start-ups and scale-ups. The amendment provides flexibility for partners, enabling them to optimise results while advancing Europe’s leadership in AI and quantum technologies.

“Today, we’ve taken a bold and swift step towards proceeding with establishing AI gigafactories in Europe. AI is one of the most critical technologies of our time, defining our digital future, and investing in the needed infrastructure capacity for AI is essential for boosting Europe’s resilience, competitiveness, and sovereignty. This move demonstrates our commitment to ensuring that Europe leads in this transformative field.”
Nicodemos Damianou, Cyprus deputy minister of research, innovation and digital policy

Next steps
Following the Council’s approval, the legislative act has been adopted. The regulation will be published in the Official Journal of the European Union on 19th of January and will enter into force on the following day.
Background
EuroHPC aims to develop, deploy, and maintain supercomputing, quantum computing, and data infrastructure in the EU, while also supporting the growth of high performing computing (HPC) systems, technologies, and skills for European science and industry. The EuroHPC regulation was amended in 2024 to include the development and operation of AI Factories —dynamic ecosystems that promote innovation and collaboration in artificial intelligence. The Commission’s proposed second amendment, introduced on 15 July 2025, builds on this by supporting the establishment of AI gigafactories, further advancing Europe’s leadership in AI innovation.
 
 
 
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Speech by Luis de Guindos, Vice-President of the ECB, at the 16th edition of Spain Investors Day

Madrid, 14 January 2026
The global economy is facing a period of profound transformation and heightened uncertainty. The past year has brought major shifts in the international economic environment, driven by significant changes in US policy and the erosion of the multilateral, rules-based system which has long supported global trade and international relations. The introduction of substantial tariffs on US imports has disrupted trade flows, weakened confidence and created ripple effects across economies. Geopolitical risks remain elevated. The shift to a new paradigm – one where rule of law principles are challenged – reflects profound global uncertainties that are likely to persist.
These developments have had tangible implications for economic activity and financial stability in the euro area. Heightened uncertainty weighs on growth prospects through two main channels: by delaying firms’ investment decisions and so affecting euro area exports, and by prompting households to increase precautionary savings and consume less than expected. At the same time, fiscal policy in several euro area countries is set to ease to accommodate higher spending, including for military and security purposes. In this environment, disrupted trade patterns can further complicate inflation dynamics. Financial stability risks remain elevated as valuations are stretched in increasingly concentrated asset markets, non-banks exhibit liquidity and leverage vulnerabilities and increasing interlinkages with banks, while growing private markets remain opaque.
Euro area Monetary Policy
Inflation remains in a good place: having hovered within a narrow range since the spring, it stood at 2.0% in December. Energy prices were lower than a year ago, while core inflation, which excludes energy and food, also fell slightly. Strong wage growth continues to push up underlying inflation. However, more forward-looking indicators point to wage growth easing in the coming quarters, before stabilising towards the end of 2026. Our most recent assessment reconfirms that inflation should stabilise at the 2% target in the medium term.
Despite the challenging environment, economic activity has been resilient. It grew by 0.3% in the third quarter of 2025, mainly reflecting stronger consumption and investment. Growth was largely driven by the services sector, while activity in industry and construction remained flat. The economy also continues to benefit from a robust labour market, with unemployment close to its historical low.
Compared with earlier projections, economic growth has been revised up to stand above 1% this year and rise to 1.4% in the following years. Given the challenging environment for global trade, domestic demand is seen as the main engine of growth in the coming quarters. Business investment and substantial government spending on infrastructure and defence should increasingly underpin the economy. Consumption is also expected to rise but the household saving rate is only gradually coming down from still elevated levels. According to a recent ECB survey, the main reasons for high savings by euro area households include the fear of higher taxes in the future (Ricardian motives) and concerns about their future income (precautionary motives).[1]
Ricardian saving motives are linked to consumers’ expectations about future developments in taxes and welfare spending. Saving scores are thus higher in euro area countries with weaker fiscal positions, such as those with public debt-to-GDP ratios above 100%.[2] Precautionary saving motives are linked to income risk, which is strongly influenced by differences in individual perceptions about uncertainty. Elevated uncertainty and geopolitical developments also pose risks to business investment, with significant repercussions for euro area exports.
Risk Environment
As an open economy deeply integrated into global supply chains and international financial markets, the euro area is exposed to external shocks and vulnerabilities stemming from geopolitical and trade developments. China has become increasingly competitive in key export sectors of euro area countries, with its share of global exports rising steadily, particularly in advanced manufacturing and green technology sectors.
But high uncertainty in the global environment does not appear to be reflected in current market pricing.[3] In fact, negative surprises – such as a re-escalation of trade or other geopolitical tensions, setbacks in AI advances with asset price adjustments or intensifying doubts regarding US fiscal credibility – could trigger abrupt shifts in sentiment, with spillovers across asset classes and geographies.
Geopolitical risk noticeably raises downside risks to growth.[4] Countries more reliant on trade, or burdened with higher levels of public debt, are at greater risk of amplification effects and resulting downside pressures.
Inflation could be affected in different directions: it could be lower if the rise in US tariffs reduced demand for euro area exports and if countries with overcapacity increased their exports to the euro area; or higher if more fragmented global supply chains pushed up import prices, curtailed the supply of critical raw materials and added to capacity constraints in the euro area economy.
On the financial side, the heightened uncertainty could result in higher risk premia, tighter lending conditions and weaker loan growth. While financial markets appear to price in very benign outcomes and downplay tail risks, safe-haven flows into gold have driven up prices to record highs, signaling high geopolitical risk and policy uncertainty.
The materialisation of geopolitical risks could form a common trigger for three of the main sources of risk and vulnerability for euro area financial stability today.[5]
First, stretched valuations in increasingly concentrated asset markets raise the risk of sharp, correlated asset price adjustments. Sudden market drawdowns could pose challenges to euro area non-banks, especially given their liquidity and leverage vulnerabilities, increasing the risk of fire sales. And opaque private equity and private markets could easily cause or amplify market downturns.
Second, growing interlinkages between banks and the non-bank financial sector could expose funding vulnerabilities in stressed market conditions.[6] As non-banks provide short-term funding to banks while banks provide credit for the leveraged activities of the non-bank sector, exposures are at risk on both sides of banks’ balance sheets.
Third, fiscal challenges in some advanced economies could test investor confidence, possibly triggering stress in sovereign bond markets. Market concerns over US fiscal credibility have risen on the back of persistently high fiscal deficits and have contributed to a steepening of yield curves. This may create risk spillovers from the United States to the euro area amplified by policy uncertainty and a depreciating dollar. Fiscal fundamentals in some euro area countries have also been persistently weak. That said, financial markets have so far smoothly accommodated high levels of issuance, but structural challenges could further limit the fiscal space.
Planned defence spending to meet the new NATO target, ageing populations and climate change, with the associated physical and transition risks, represent major challenges. To mitigate the current risks to the sustainability of sovereign debt, excessive fiscal deficits and public debts in the euro area need to be reduced in line with the revised economic governance framework. The consolidation of public finances should be designed in a growth-friendly way and combined with strategic investment and growth-enhancing structural reforms.
EU Challenges Ahead
In this uncertain macro-financial environment, preserving the resilience of banks and the broader financial system remains crucial. Banks should maintain sound solvency and liquidity positions to enable them to absorb potential shocks ahead. At the same time, we are making significant efforts to reduce undue complexities and simplify EU banking rules and the reporting and supervisory framework for banks. In view of the growing importance of the non-bank sector, it is also vital to monitor it more closely and strengthen its regulation from a macroprudential perspective.
We are facing a big change in the world order with mounting geopolitical challenges. The only viable path forward is to sustain our European values and promote stronger cooperation and deeper integration within Europe. To strengthen Europe’s growth prospects and reduce its vulnerability to future shocks, we need more Europe, not less. Unlocking the full potential of the Single Market is crucial, as is completing the banking union. A truly integrated market for goods and services would advance progress towards the savings and investments union, reduce national fragmentation and support deeper and more efficient capital markets.
The world has changed, and Europe has to adapt to this new paradigm. Greater cooperation and integration are not optional – they are the only way forward for Europe.
 

See ECB (2026), ECB Consumer Expectations Survey results – November 2025, 8 January. While other saving motives, such as intertemporal substitution and saving out of habit, are also significant, they scored slightly lower in importance.
In the survey, Ricardian motives are validated by the finding that respondents reporting trust in their national government assign a significantly lower importance to the Ricardian saving motive relative to respondents who distrust their government. These survey results are consistent with those of Tabellini, G. (2010), “Culture and Institutions: Economic Development in the Regions of Europe”, Journal of the European Economic Association, Vol. 8, No 4, pp. 677-716.
See Financial Stability Review, ECB, November 2025.
See ECB/ESRB report on the financial stability risks from geoeconomic risks, forthcoming January 2026.
See footnote 3.
Bochmann, P., Dieckelmann, D., Grodzicki, M., Horan, A., Larkou, C. and Lenoci, F. (2025), “Systemic risks in linkages between banks and the non-bank financial sector”, Financial Stability Review, ECB, November.

 
 
 
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Yet one in four developing economies remains poorer than it was in 2019
WASHINGTON, January 13, 2026—The global economy is proving more resilient than anticipated despite persistent trade tensions and policy uncertainty, according to the World Bank’s latest Global Economic Prospects report.  Global growth is projected to remain broadly steady over the next two years, easing to 2.6% in 2026 before rising to 2.7% in 2027, an upward revision from the June forecast.
The resilience reflects better-than-expected growth—especially in the United States, which accounts for about two-thirds of the upward revision to the forecast in 2026. Even so, if these forecasts hold, the 2020s are on track to be the weakest decade for global growth since the 1960s. The sluggish pace is widening the gap in living standards across the world, the report finds: at the end of 2025, nearly all advanced economies enjoyed per capita incomes exceeding their 2019 levels, but about one in four developing economies had lower per capita incomes.
In 2025, growth was supported by a surge in trade ahead of policy changes and swift readjustments in global supply chains. These boosts are expected to fade in 2026 as trade and domestic demand soften. However, the easing global financial conditions and fiscal expansion in several large economies should help cushion the slowdown, according to the report. Global inflation is projected to edge down to 2.6% in 2026, reflecting softer labor markets and lower energy prices. Growth is expected to pick up in 2027 as trade flows adjust and policy uncertainty diminishes.
“With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics. “But economic dynamism and resilience cannot diverge for long without fracturing public finance and credit markets. Over the coming years, the world economy is set to grow slower than it did in the troubled 1990s—while carrying record levels of public and private debt. To avert stagnation and joblessness, governments in emerging and advanced economies must aggressively liberalize private investment and trade, rein in public consumption, and invest in new technologies and education.”
In 2026, growth in developing economies is expected to slow to 4% from 4.2% in 2025 before edging up to 4.1% in 2027 as trade tensions ease, commodity prices stabilize, financial conditions improve, and investment flows strengthen.  Growth is projected to be higher in low-income countries, reaching an average of 5.6% over 2026–27, buoyed by firming domestic demand, recovering exports, and moderating inflation. However, this  will not be sufficient to narrow the income gap between developing and advanced economies. Per capita income growth in developing economies is projected to be 3% in 2026—about a percentage point below its 2000-2019 average. At this pace, per capita income in developing economies is expected to be only 12% of the level in advanced economies. 
These trends could intensify the job-creation challenge confronting developing economies, where 1.2 billion young people will reach working age over the next decade. Overcoming the jobs challenge will require a comprehensive policy effort centered on three pillars. The first is strengthening physical, digital, and human capital to raise productivity and employability. The second is improving the business environment by enhancing policy credibility and regulatory certainty so firms can expand. The third is mobilizing private capital at scale to support investment. Together, these measures can help shift job creation toward more productive and formal employment, supporting income growth and poverty alleviation.
In addition, developing economies need to bolster their fiscal sustainability, which has been eroded in recent years by overlapping shocks, growing development needs, and rising debt-servicing costs.  A special-focus chapter of the report provides a comprehensive analysis of the use of fiscal rules by developing economies, which set clear limits on government borrowing and spending to help manage public finances. These rules are generally linked to stronger growth, higher private investment, more stable financial sectors, and a greater capacity to cope with external shocks.
“With public debt in emerging and developing economies at its highest level in more than half a century, restoring fiscal credibility has become an urgent priority,” said M. Ayhan Kose, the World Bank Group’s Deputy Chief Economist and Director of the Prospects Group. “Well-designed fiscal rules can help governments stabilize debt, rebuild policy buffers, and respond more effectively to shocks. But rules alone are not enough: credibility, enforcement, and political commitment ultimately determine whether fiscal rules deliver stability and growth.”
More than half of developing economies now have at least one fiscal rule in place. These can include limits on fiscal deficits, public debt, government expenditures, or revenue collection. Developing economies that adopt fiscal rules typically see their budget balance improve by 1.4 percentage points of GDP after five years, once interest payments and the ups and downs of the business cycle are accounted for.  Use of fiscal rules also increases by 9 percentage points the likelihood of a multi-year improvement in budget balances.  However, the medium- and long-term benefits of fiscal rules depend heavily on the strength of institutions, the economic context in which the rules are introduced, and how the rules are designed, the report finds.
Click here to download the full report.
 
 
 
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Published as part of the ECB Economic Bulletin, Issue 8/2025.
Trade policy uncertainty has risen significantly in the face of higher tariffs and tariff threats, adding a new layer of complexity to assessing the global economic outlook. Shifts in tariff and trade policy, unpredictable communication and the move away from rules-based multilateralism towards bilateral leverage have heightened uncertainty for firms and investors. This has influenced sourcing, production and investment decisions, and may weigh on trade dynamics, investment and overall macroeconomic performance. Moreover, uncertainty can affect expectations and dampen activity even in the absence of concrete policy changes. Monitoring it has therefore become crucial to assessing the economic outlook. Trade policy uncertainty has been an important part of the technical assumptions underlying recent rounds of the Eurosystem/ECB staff macroeconomic projections for the euro area.[1]
However, trade policy uncertainty is unobservable and difficult to model. To capture it, indicators such as the trade policy uncertainty (TPU) index set out in Caldara et al. (2020) count press articles in which trade-related and uncertainty-related keywords appear in close proximity. This index, shown in Chart A for 1990-2025, remained subdued during 1990-2016 before rising during the first Trump election campaign and presidency as well as the first US-China trade conflict, in 2018-20. In April 2025 it reached a historical high when the second Trump Administration imposed a 10% baseline tariff on most imports and additional country-specific tariffs of up to 50%. Although the TPU index has since eased, it remains elevated by historical standards.
As regards gauging the macroeconomic effects of trade policy uncertainty, for the last couple of quarters standard linear models often imply implausibly large effects. One reason for this is that these models extrapolate from historical relations that may no longer hold. Another reason relates to the construction of the TPU index itself: the April spike implies that a very large proportion (around 10%) of all press articles in the underlying text data corpus mention trade policy uncertainty-related keywords, which suggests the index may have been inflated by heightened media attention or trade policy keywords being mentioned in the context of other topics.

Chart A
Trade policy uncertainty index

(percentages of press articles mentioning TPU keywords, multiplied by 100)

Sources: Caldara et al. (2020) and ECB staff calculations.
Note: The chart shows the raw TPU index as reported by Caldara et al. (2020).

The contamination of text-based TPU indicators is likely related to media coverage of trade policy coinciding with broader economic or political reporting. One concern is that policy actions have heightened uncertainty not only in trade but also in other policy areas. As a result, measured trade policy uncertainty may overlap with other forms of uncertainty. For instance, an article published by Reuters in June (Saphir, 2025) mentions trade policy, but primarily in the context of geopolitical risk: “with the U.S. economy already expected to slow under pressure from the Trump administration’s high import tariffs, a rise in oil prices resulting from the conflict [the strike on Iran] ‘could provide powerful downward pressure on households’ ability to spend…”. Such reporting also highlights another borderline case: articles discussing the economic uncertainty regarding the effects of tariffs rather than uncertainty about trade policy itself, as in “and while it is also expected to show inflation running near the Fed’s 2% goal last month, many Fed officials expect tariffs to feed into higher prices…” in the same article. Consequently, media reports may inflate counts of TPU-related keywords when the index is interpreted in a strictly economic sense. Against this background, this box cautions against mechanically interpreting TPU indicator readings as pure uncertainty shocks and proposes an alternative measure for use in standard macroeconomic models.
The standard TPU measure can be refined by eliminating contaminating influences. These influences become problematic when econometric analysis is seeking to disentangle distinct uncertainty channels, for instance in scenario analysis, and may lead to double-counting if readings from the raw TPU measure are treated as a primitive trade policy uncertainty shock. This box therefore proposes an alternative TPU measure, which uses the raw index cleaned for cases of keyword-driven co-mentions, such as those cited in the previous paragraph. Rather than being constructed from the ground up, the unadjusted series is cleaned indirectly by regressing it on a set of proxies, a constant and a COVID-19 pandemic dummy. This removes variation explained by historical co-movements of uncertainty-related keywords while preserving changes that extend beyond them. The first set of proxies controls for instances where broad uncertainty coverage inflates TPU counts, and includes: the categorical economic policy uncertainty indices of Baker et al. (2016), excluding trade policy; the geopolitical risk index of Caldara and Iacoviello (2022); the CBOE Volatility Index (VIX); and oil price volatility. The second set addresses episodes when financial or supply chain stress drives reporting on trade-related risks: the US National Financial Conditions Index (NFCI) and the Global Supply Chain Pressure Index (GSCPI). Finally, the effective tariff rate, defined as customs revenues relative to imports, controls for cases where media coverage reflects realised changes in trade policy rather than uncertainty about future measures.[2]
The cleaned indicator shows significantly smaller spikes throughout 2025. Chart B, panel a) presents the cleaned TPU indicator alongside the untreated indicator.[3] While it maintains the primary characteristics of the original indicator, the spikes observed in 2025 are only 20% as high and exceed the levels observed during the first US-China trade conflict by a smaller margin.[4] Recent developments are generally comparable to those observed in measures of economic policy uncertainty (EPU), such as the news-based US EPU, the three-component US EPU and the global EPU illustrated in Chart B, panel b). The coincidence of spikes across different uncertainty measures in part explains the disproportionate spike in the raw TPU indicator if not controlled for. At the same time, the cleaned TPU indicator still spikes during the first US-China trade conflict, aligning well with the raw TPU. Taken together, this supports the view that the unadjusted TPU indicator may be misinterpreted in the present high-uncertainty environment unless a narrow interpretation of trade policy uncertainty shocks is adopted.

Chart B
The TPU index and other uncertainty measures

a) TPU and cleaned TPU

b) Cleaned TPU and economic policy uncertainty measures

(diffusion indices)

(diffusion indices, standardised)

Sources: Panel a): Caldara et al. (2022) and ECB staff calculations; Panel b): Baker et al. (2016), Davis (2016) and ECB staff calculations.
Note: Latest observations: September 2025.

The adjusted TPU index allows counterfactual scenarios to be constructed that yield more plausible estimates of macroeconomic impacts. On the basis of the adjusted index, alternative paths for the degree of trade policy uncertainty can be defined and updated as new data become available, providing a flexible input for conditional forecasting and projection exercises. Chart C, panel a) illustrates two scenarios: one in which TPU declines from current levels to the average observed during the first trade conflict, and another that assumes a more protracted decline. Chart C, panel b) shows the corresponding effects on US GDP and on global GDP (excluding the US), taking into account TPU-implied shocks since the beginning of the year. Under these assumptions, GDP in the United States and the rest of the world would contract by about 0.1 percentage points by the end of 2027 if uncertainty fell back to first trade conflict levels, but by roughly 0.2 percentage points if uncertainty remained elevated for longer.

Chart C
The impact of trade policy uncertainty on growth

a) Evolution of trade policy uncertainty
(index, three-month moving averages)

b) Cumulative impact of uncertainty on GDP growth, 2025-27
(percentage points)

Source: ECB staff calculations.
Notes: Panel a): Latest observation: July 2025, extrapolations thereafter. Panel b): The impacts are computed from forecasts based on Bayesian vector autoregression models, conditional on the assumed path of cleaned TPU. The models include, for one region at a time, the cleaned TPU; the logs of GDP, investment and CPI; as well as a COVID-19 pandemic dummy. The TPU shock is identified with Cholesky identification.

In conclusion, adjusting TPU measures can improve their indicator properties and make them easier to interpret. This box argues that text-based measures of trade policy uncertainty might capture a broader concept of uncertainty than uncertainty surrounding trade policy announcements and implementation alone. Once confounding influences and media cycle effects are removed, adjusted measures of trade policy uncertainty yield less sizeable macroeconomic impacts than commonly reported in the literature. In addition, if a more restrictive definition of trade policy uncertainty is adopted, these alternative indicators can readily be used to define scenarios for conditional forecasting and projection exercises. In this context, the adjusted TPU index was used as a starting point for analysing the impact of trade policy uncertainty in the Eurosystem/ECB staff macroeconomic projections for the euro area, and was employed both for baseline projections and scenario analysis.
References
Baker, S.R., Bloom, N. and Davis, S.J. (2016), “Measuring Economic Policy Uncertainty”, The Quarterly Journal of Economics, Vol. 131, Issue 4, November, pp. 1593-1636.
Caldara, D. and Iacoviello, M. (2022),“Measuring Geopolitical Risk”, American Economic Review, Vol. 112, No 4, April, pp. 1194-1225.
Caldara, D., Iacoviello, M., Molligo, P., Prestipino, A. and Raffo, A. (2020), “The economic effects of trade policy uncertainty”, Journal of Monetary Economics, Vol. 109, January, pp. 38-59.
Davis, S.J. (2016), “An Index of Global Economic Policy Uncertainty”, NBER Working Papers, No 22740, National Bureau of Economic Research, October.
Saphir, A. (2025), “US attack on Iran adds to economic uncertainty”, Reuters, 23 June.

See Box 2 of “Eurosystem staff macroeconomic projections for the euro area, June 2025” and Box 1 of “ECB staff macroeconomic projections for the euro area, September 2025”.
The effective tariff rate is outlier-adjusted.
The cleaned index is centred on its long-term historical average. Negative values hence indicate cleaned TPU levels below that average while positive values indicate above-average uncertainty.
The adjusted indicator is slightly more volatile, potentially adding noise to the analysis.

 
Author:
• Maximilian Schröder, Graduate Programme Participant · International & European Relations, External Developments, ECB

Compliments of the European Central Bank 
 

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