LONDON (Reuters) – Europe’s economic recovery remains fragile, leaving little room for complacency, with risks exacerbated by political uncertainty before key elections, European Central Bank chief economist Peter Praet said on Thursday.
Although recent indicators from PMI figures to confidence have surprised on the upside, Praet warned that the recovery was dependent on substantial support from the ECB.
With growth picking up pace, conservative policymakers have argued for some form of monetary tightening, a call so far resisted by the Governing Council.
“Despite the resilient recovery in the euro area, and strong indicators of confidence across all sectors, measures of political and policy uncertainty have been rising recently, although asset markets are not significantly pricing in tail risks,” Praet said in London.
“The recent bouts of uncertainty are a source of concern, and represent a downside risk to the economic outlook,” Praet told a conference.
(Reporting by Marc Jones; editing by Balazs Koranyi)