Frankfurt - The European Central Bank said on Wednesday that persistent uncertainty linked to wars and trade friction will continue to suppress growth in the euro zone this year, but it flagged a partial offset as companies reorient spending toward intangible assets such as artificial intelligence.
In an analysis published in its Economic Bulletin, the ECB estimated that uncertainty curbed euro zone economic growth by 0.4% when comparing the first quarters of 2025 and 2026, a reduction it attributes to both corporate and household restraint in spending. The institution warned that this drag is expected to persist through the remainder of the year.
However, the ECB highlighted a difference in the resilience of spending types. Expenditure on intangibles - which includes software, data and investments tied to artificial intelligence - appears to be holding up better than outlays on physical capital. Corporate surveys cited by the central bank indicate that stronger-than-normal spending on AI so far this year has provided a buffer for an economy that the ECB sees expanding by 1% in 2026.
"To the extent that the ongoing shift in the composition of investment towards intangibles continues, the aggregate response of investment to uncertainty shocks may become more muted over time," the ECB said.
"Such a compositional shift could therefore act as a gradual stabiliser of the investment cycle, even as uncertainty itself remains a significant driver of macroeconomic fluctuations," the ECB added.
The report also described differing behavioural responses across sectors. Households tend to trim spending on large durable goods - the ECB explicitly noted cars as an example - during periods of heightened uncertainty, but this pullback is generally modest and spending often rebounds relatively quickly once uncertainty recedes.
By contrast, business investment in tangible capital goods typically suffers a larger and more persistent decline following uncertainty shocks. Such tangible spending, the ECB said, tends to remain subdued for an extended period even after the initial shock fades, implying a longer recovery path for areas of the economy reliant on physical capital investment.
While the central bank stopped short of forecasting a rapid turnaround, its analysis points to a structural change in how firms allocate capital that could temper the macroeconomic impact of future uncertainty episodes if the shift toward intangibles endures.