Mideast war forces EU to slash eurozone 2026 growth forecast
The commission said the eurozone will grow 0.9% in 2026 and inflation will reach 3.0% as energy costs rise.
- On Thursday, the European Commission cut its 2026 growth forecast for the European Union to 1.1% and the eurozone to 0.9%, citing sharply higher energy prices from the Middle East conflict.
- After Iran retaliated to US-Israeli strikes, the conflict closed the Strait of Hormuz, triggering a major energy shock and marking the second such crisis in less than five years following Ukraine.
- Inflation is now expected to reach 3.0% for 2026, up from 1.9%, exceeding the European Central Bank's 2% target while consumer confidence fell to a 40-month low amid rising costs.
- Italian Prime Minister Giorgia Meloni recently urged the European Commission to relax fiscal rules for energy, arguing that energy security requires the same budgetary flexibility as defense spending.
- Brussels warned that Europe could face a worse scenario if energy prices continue rising through the year, potentially causing inflation to persist and stalling economic recovery into 2027.
44 Articles
44 Articles
EU forecasts weaker growth, rising inflation
The European Union (EU) economy is expected to grow at a slower pace with higher inflation, and the positive trend in labor markets is set to halt amid the energy shock triggered by the Middle East conflict, the European Commission's spring forecast said on Thursday.
EU cuts growth forecast as energy prices drive inflation higher
The European Commission lowered its economic growth forecast for the European Union after a new energy shock linked to conflict in the Middle East pushed inflation higher and weakened business confidence across the bloc. In its Spring 2026 Economic Forecast published on Tuesday, the Commission said the EU economy would continue to grow, though at a slower pace than previously expected. The Commission now expects EU gross domestic product growth …
The oil price shock hit Europe hard. Hope for an upswing of the largest euro economy Germany is dwindling. In 2027 it could get a little better - under certain conditions.
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