Following its successful debut in November 2023, the Second Forum Bundesbank took place in Madrid on 10 February 2025. Navigating in Changing Times: Geopolitics, Inflation and the Economy was the theme of this event, which once again provided a platform for fostering economic policy debate in Spain whilst at the same time illuminating key economic developments from the Bundesbank’s perspective.  

Opening speech by the Bundesbank: Germany’s economic situation and structural challenges

The forum kicked off with the opening speech by Fabian Huttner, the Bundesbank’s representative in Spain. He gave a comprehensive overview of the economic situation in Germany and stressed that Europe’s largest economy was still facing a period of persistent weakness.  

Huttner explained that Germany had been facing a period of persistent weakness since mid-2022. In addition to the more immediate economic challenges, he highlighted the structural problems that the country will have to overcome in the years to come. These include:

• High energy costs: despite gas prices being down from their level in the summer of 2022, they remain at a level that is weighing on energy-intensive industries in particular.
• Declining competitiveness: increasing competition, especially from Asia, as well as structural weaknesses in the field of innovation are affecting firms’ strength as exporters and propensity to invest.
• Demographic change: a declining potential labour force, which immigration can only offset to a limited extent, are posing a major long-term challenge.

Huttner stressed the need to take a clear-eyed look at these challenges without succumbing to excessive pessimism. Instead, targeted reforms and investment were needed to set the stage for a sustained improvement in the economic environment.

Fireside Chat: Trade policy, interest rate policy and the future of the euro area

© José Alberto Puertas

The main highlight of the event was the Fireside Chat between José Manuel González-Páramo, a former member of the Executive Board of the European Central Bank and renowned economics professor, and Amador G. Ayora, editor-in-chief of the prestigious Spanish business newspaper El Economista.  

In an open and lively discussion, they analysed the geopolitical and economic developments that are currently shaping both the United States and Europe. The possible impact of US trade policy under a second Trump administration was a key focus of the debate. González-Páramo pointed out that US protectionist measures, especially new tariffs, could further fuel inflation in the United States and indirectly affect Europe. This would significantly constrain the European Central Bank’s scope to make monetary policy decisions and make it more difficult to cut interest rates in the eurozone.  

The discussion also focused on the future trajectory of the European economy. The experts discussed the challenges currently facing large economies such as Germany and France. An important aspect of this was the growing importance of the capital markets union and a digital euro. According to González-Páramo, the introduction of such an instrument could help to strengthen the European financial infrastructure and expand the role of the euro in the global financial system.  

Prestigious participants and lively discussions  

The event met with great interest and brought together over 70 high-level representatives from the Spanish business and financial sectors, government ministries, the Spanish central bank, think tanks, consulting firms and non-governmental organisations (NGOs). Numerous diplomats from other embassies in Madrid also took part. 

After the Fireside Chat, many participants took the opportunity to participate actively in the discussion. The event provided a platform for an open exchange of views and opinions on economic and fiscal policy issues and once again demonstrated the importance of close dialogue between Germany and Spain on economic and monetary policy issues.  

The Second Forum Bundesbank in Madrid once again highlighted the Bundesbank’s central role as a driving force for international central bank dialogue. The combination of in-depth analyses and lively discussions on current issues sets the course not only for overcoming current challenges but also for undertaking future reforms. The Forum thus makes an important contribution to deepening economic policy relations between Germany and Spain and promotes the exchange of views and opinions on the major global and European economic policy issues.