The European Commission has warned of threats to the stability of the European economy
21 May 18:42
The Spring Economic Forecast for 2026, published by the European Commission’s press service, predicts a slowdown in economic activity across the EU due to the conflict in the Middle East, which is triggering a new energy crisis. This factor is fueling inflation and undermining economic confidence.
The relevant document was published today by the European Commission’s press service, reports "Komersant Ukrainian".
“By the end of February 2026, the EU economy was expected to continue growing at a moderate pace alongside a further decline in inflation, but the outlook has changed significantly since the start of the conflict,” the forecast states.
Following EU GDP growth of 1.5% in 2025, the economy is expected to slow to 1.1% in 2026, which is 0.3 percentage points lower than anticipated in the fall. In 2027, growth could accelerate to 1.4%.
Inflation and the Energy Shock
Inflation in the EU is projected to reach 3.1% in 2026—a full percentage point higher than the previous forecast—and then decline to 2.4% in 2027.
This is due to a sharp rise in energy prices.
“As a net energy importer, the EU economy is highly vulnerable to an energy shock caused by the conflict in the Middle East,” the report notes.
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Labor Market and Investment
The long period of falling unemployment is coming to an end. In 2025, employment rose by 0.5%, adding over 1 million jobs to the EU economy. In 2026, employment growth is projected to slow to 0.3%, and in 2027, to accelerate slightly to 0.4%. Business investment will be held back by tighter financing conditions, lower profits, and increased uncertainty.
The energy shock is also putting additional pressure on public finances. The EU budget deficit is expected to rise from 3.1% of GDP in 2025 to 3.6% in 2027 due to low economic activity, higher interest costs, and increased defense spending. The EU’s debt-to-GDP ratio is projected to rise from 82.8% in 2025 to 85.3% in 2027.
The main risk to the forecast is linked to the duration of the conflict in the Middle East and its impact on global energy markets. In an adverse scenario, energy prices could rise even further, preventing inflation from falling and economic activity from recovering in 2027.
The forecast also notes that shortages of certain resources, particularly petroleum products, helium, and fertilizers, could negatively impact global supply chains and food availability.
The European Commission publishes two comprehensive economic forecasts each year—spring and fall—for EU member states, candidate countries, and other advanced economies. The fall forecast for 2026 is expected in November.
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