The European Commission has revised down its economic projections for the European Union and the eurozone this Thursday due to the impact of the new "energy shock" linked to the conflict in the Middle East, which, it warns, will cause lower GDP growth and a rebound in inflation in 2026 and 2027.
In its spring economic forecasts, Brussels now calculates that the eurozone's GDP will increase by 0.9% in 2026 and 1.2% in 2027, down from the 1.2% and 1.4% it indicated in the autumn report. For the EU as a whole, the Commission forecasts growth of 1.1% this year and 1.4% next year, which is three and one tenth less, respectively, than in its previous calculations.
The Community Executive attributes this worsening scenario to the rise in energy prices following the outbreak of the crisis in the Middle East and the effect it is having on the confidence of households and businesses, as well as on investment and foreign trade.
"The conflict in the Middle East has triggered a new energy shock with a major impact on the European and global economy," said European Commissioner for Economy, Valdis Dombrovskis, who also warned that this context "fuels inflation and shakes economic confidence."
In this context, Brussels anticipates that the European economy will continue to grow, but "at a slower pace," in an environment defined by an "exceptionally high degree of uncertainty" about the evolution of the conflict and energy markets.
The Commission emphasizes that the EU, as a net energy importer, is "highly susceptible" to this new shock, although it points out that the diversification of suppliers and the investments undertaken since the Russian invasion of Ukraine have left the European economy "in a better position" to cushion this new crisis.
"Although the impact is expected to be more contained than during the previous energy crisis, inflation will increase significantly," indicated Dombrovskis, who insisted that the EU's investments in energy resilience "are paying off."
Inflation rebound in 2026
New community projections point to a notable rebound in inflation in 2026, directly linked to the increase in energy costs. Brussels forecasts that prices will rise to 3% in the eurozone and 3.1% in the EU as a whole, well above the 1.9% and 2.1% calculated in the autumn. From 2027 onwards, however, the increase would moderate to 2.3% in the eurozone and 2.4% in the EU.
As the Commission explains, this rebound is already beginning to be seen in the March and April data, especially in energy bills, and anticipates that inflationary pressures will eventually be gradually transferred to other components of the economy.
Spain resists better than Germany, France and Italy
Among the bloc's major economies, Germany will be one of the hardest hit by the new energy and trade context, with growth limited to 0.6% in 2026, half of what Brussels projected last autumn.
In contrast, Spain will once again be the major economy with the highest growth, with an advance of 2.4%, four times higher than that projected for Berlin, three times that of France, and almost five times that of Italy.
"The risks to the forecasts are clearly tilted to the downside and the window for normalization in line with the central scenario is narrowing," Dombrovskis warned.
Adverse scenario: oil at $180 and gas at 80 euros
The European Commission also outlines a more negative scenario in which, if geopolitical tensions and energy supply disruptions persist longer than expected, the price of a barrel of oil could soar to $180 and gas could reach 80 euros per megawatt-hour by the end of 2026. This situation would have "very serious implications" for growth and inflation in the EU, the Latvian commissioner warned.
In that case, the Community Executive forecasts that inflation would continue to escalate and take longer to correct, while European GDP expansion would weaken notably compared to current forecasts for both 2026 and 2027.
Furthermore, Brussels warns that a prolonged conflict could exacerbate tensions in global supply chains and extend the impact to other key commodities, such as fertilizers and refined petroleum products.
Resilient employment and public finances under pressure
Despite the worsening environment, the Commission expects the European labor market to maintain some strength, although with a progressive loss of dynamism in job creation. Thus, employment in the EU will grow by 0.3% in 2026 and 0.4% in 2027, while the unemployment rate will stop falling and will stabilize around 6% in the Union as a whole.
In parallel, Brussels projects a gradual deterioration of public accounts, due to lower growth, the increase in the cost of debt, support measures against rising energy prices, and the increase in defense spending.
With this scenario, the aggregate public deficit of the EU will go from 3.1% of GDP registered in 2025 to 3.6% in 2027, while the community public debt will continue to increase throughout the forecast horizon.