EU in stagflationary trend, must not risk fiscal crisis, ministers say
By Jan Strupczewski and Francesco Canepa
NICOSIA, May 22 (Reuters) - Europe's economy is in a stagflationary trend due to the surge in energy prices caused by the Iran war, but governments must be wary that generous fiscal support could risk a fiscal crisis or higher ECB rates, top EU officials said on Friday.
The European Commission forecast on Thursday that euro zone economic growth will slow to 0.9% in 2026 from 1.3% in 2025 and inflation will jump to 3.0% from 1.9%, well above the European Central Bank's target of 2.0%.
"There is stagflationary pressure, but Europe is resilient," the chairman of euro zone finance ministers Kyriakos Pierrakakis said.
Investors have started worrying that the war in Iran may cause a lasting inflationary shock and yields of government bonds rose to decade highs, threatening a severe hit to the spending power of governments, businesses and households.
https://finance.yahoo.com/...
By Jan Strupczewski and Francesco Canepa
NICOSIA, May 22 (Reuters) - Europe's economy is in a stagflationary trend due to the surge in energy prices caused by the Iran war, but governments must be wary that generous fiscal support could risk a fiscal crisis or higher ECB rates, top EU officials said on Friday.
The European Commission forecast on Thursday that euro zone economic growth will slow to 0.9% in 2026 from 1.3% in 2025 and inflation will jump to 3.0% from 1.9%, well above the European Central Bank's target of 2.0%.
"There is stagflationary pressure, but Europe is resilient," the chairman of euro zone finance ministers Kyriakos Pierrakakis said.
Investors have started worrying that the war in Iran may cause a lasting inflationary shock and yields of government bonds rose to decade highs, threatening a severe hit to the spending power of governments, businesses and households.
https://finance.yahoo.com/...
13 days ago
