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Agence France-Presse

FRANKFURT, Germany - The vice president of the European Central Bank said Monday that Donald Trump&#x27;s spending plans risked inflating the US government&#x27;s budgetary deficit and spreading worries on markets.The United States already has a public debt ratio close to 100 percent of gross domestic product, and a spending deficit close to seven percent, Luis de Guindos said at a banking conference in Frankfurt.&quot;The elected president (Trump) has promised to reduce taxes and perhaps not to cut down on public spending,&quot; de Guindos said.The plan could lead the deficit to grow and &quot;create concerns in markets&quot;, de Guindos said.Since sealing victory in the presidential election earlier this month, Trump has yet to announce his nominee for treasury secretary.The president-elect has however tapped the world&#x27;s richest man Elon Musk and businessman Vivek Ramaswamy to lead a newly formed department of government efficiency.The duo was asked by the incoming administration to cut red tape and &quot;wasteful expenditures&quot;, while Musk has promised to strip $2 trillion (1.9 trillion euros) from the federal budget.Besides Trump&#x27;s spending plans, the incoming president&#x27;s promise to raise tariffs has prompted concerns in Europe, where officials fear higher import tariffs could slow trade and weigh on the economy.&quot;The growth outlook is clouded by uncertainty about economic policies and the geopolitical landscape, both in the euro area and globally,&quot; de Guindos said.&quot;Trade tensions could rise further,&quot; with resulting risks for economic activity, de Guindos noted.This context compounded &quot;structural issues of low productivity and weak potential euro area growth&quot;, he added.As inflation in the eurozone has eased back towards the ECB&#x27;s two-percent target, the central bank has begun lowering interest rates.At its last meeting, policymakers settled on a quarter-point cut, which put the bank&#x27;s benchmark deposit rate at 3.25 percent.While inflation had slowed, &quot;economic activity has been weaker than expected&quot;, de Guindos said.Compared with a year ago, &quot;the balance of macro risks has shifted from concerns about high inflation to fears over economic growth&quot;, he said.Weak growth prospects would strengthen the case for the ECB to continue cutting rates. The bank holds its next rate-setting meeting on December 12.

The US already has a public debt ratio close to 100 percent of GDP and a spending deficit close to seven percent.

The US already has a public debt ratio close to 100 percent of GDP and a spending deficit close to seven percent.

ECB says Trump budget plans could fuel market tensions

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ECB says Trump budget plans could fuel market tensions

Agence France-Presse

Published Nov 18, 2024 09:43 PM PHT

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