"The Iran crisis is drawing to a close, and we're already starting to talk about tariffs again. You have a major player like the President of the United States, who can shape the narrative. “We're not going to reach a peace agreement” he says, and, if markets attach a certain degree of credibility to that statement, they immediately fall.

So, you can try to mobilise the narrative, depending on the various actors involved and how they interact with one another."

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Uncertainty is part and parcel of every decision, but lately it seems to be creating so much noise that it prevents us from seeing our options clearly

We take decisions all the time. Some are routine, almost automatic, while others can shape our future. Whether you're deciding what to wear or whether to take out a fixed- or variable-rate mortgage, we never have all the information we need.

What is missing—what we don’t know—has a name: uncertainty. And it affects not only our personal decisions but also the behaviour of the economy as a whole.

Javier Pérez, Associate Director General Economics, argues that not all uncertainty is the same. It ranges from events with clearly defined probabilities, such as the toss of a coin or the roll of a die, to events that are almost impossible to measure: “What is the probability of a pandemic tomorrow? Zero. Does that mean there won’t be one? No.”

In an uncertain world, decision-making is not about predicting what will happen, but about managing what could happen. In other words, it means considering different possible futures and deciding what we would do in each of them.

This has a very real impact on the economy. When uncertainty increases, households and businesses adjust their behaviour; “uncertainty generally acts as a brake”, because if we don’t know what tomorrow will bring, we tend to be more cautious today.

This often translates into more saving, less investment and postponed decisions. The same applies at a global level: institutions and markets also react to an uncertain environment.

In recent years, uncertainty has not only increased but has also become more visible. Geopolitical crises, economic shifts, technological advances, we are constantly surrounded by information. And not all uncertainty stems from actual events; the way those events are interpreted – the narrative – also matters.

Marina Diakonova, a specialist in complex systems analysis in the Global Trends and Institutions Analysis Office, explains how narratives (what markets, the media or political leaders say) can interact with one another and amplify the perception of uncertainty, even influencing the path of economic variables.

In a world full of noise, change and narratives, the key is not to eliminate uncertainty (an impossible task) but to change how we deal with it. Rather than relying on a single forecast, we should consider a range of possible scenarios and prepare for each of them.