EU Sees Risk of Stagflation Shock for Europe From Iran War

The European Union economy is at danger enduring low growth combined with high inflation because of the war in the Middle East, according to the bloc’s economy chief.

“It is clear that, in any scenario, we are at real risk of a stagflationary shock,” Commissioner Valdis Dombrovskis told reporters on Friday after presenting estimates that would shave 0.4 percentage points off EU output this year in case of a short-lived war, and 0.6 percentage points in 2026 and 2027 compared with the previous forecast in autumn should the conflict be more protracted.