EU Spring 2026 Forecast Downside Scenario: Prolonged Middle East Conflict Cuts EU GDP Growth Nearly in Half (economy-finance.ec.europa.eu)

• Downside scenario: EU GDP growth halved to 0.7% in 2026 and 2027; inflation rises to 3.5% in 2027.
• Assumes oil at $180/bbl, gas at €80/MWh; Strait of Hormuz partially closed until late 2026.
• Risk premia up 25 bps; monetary policy tightens 30 bps in 2027; global growth slows 0.5 pp.

"The European Commission's Spring 2026 Economic Forecast includes a downside scenario where a prolonged Middle East conflict keeps oil and gas prices high through 2027. Under this scenario, EU GDP growth falls to 0.7% in both 2026 and 2027 (from baseline 1.1% and 1.4%), while inflation rises to 3.3% in 2026 and 3.5% in 2027. The scenario assumes oil prices peak at $180/bbl in late 2026 and European gas prices at €80/MWh. The analysis uses the Commission's Global Multicountry model and incorporates risks from confidence, trade, and financial conditions."