The European Commission has cut its EU growth forecast for 2026 to 1.1%, with inflation expected to hit 3.1% over the year as prices rise due to the war in Iran.
"The conflict in the Middle East has triggered a major energy shock, further testing Europe as it navigates an already volatile geopolitical and trade environment," EU Economy Commissioner Valdis Dombrovskis said on Thursday.
Fossil fuel prices have surged worldwide as a result of the war in Iran and Tehran's blockade of the Strait of Hormuz, a major shipping route.
Inflation in the 27-strong bloc is forecasted to reach 3.1% in 2026, an upward revision of one percentage point compared to the commission's previous forecast published in November.
Consumer prices in the 21-member eurozone are expected to rise by 3% in 2026, up from 1.9% as in the previous forecast.
The commission revised its forecast for gross domestic product (GDP) growth down 0.3 percentage points to 1.1% for the entire EU and 0.9% in the eurozone.
