The European Union is set to downgrade its growth projections and raise its inflation forecasts, citing a 'stagflationary shock' linked to the war with Iran.
The European Commissioner for Economy and Production has highlighted the economic risks posed by the conflict, which is intensifying geopolitical tensions and disrupting global markets.
Markets have responded to the news with heightened volatility, as investors reassess the potential impact of prolonged conflict on energy prices and supply chains.
The European Central Bank is expected to monitor the situation closely, with policymakers likely to factor in the evolving geopolitical landscape when considering future monetary policy decisions.
The conflict with Iran has already strained global energy markets, with shipping routes in the Strait of Hormuz under increased scrutiny.
Analysts warn that any escalation could further disrupt oil and gas flows, exacerbating inflationary pressures across Europe and beyond.