Eurogroup warns Iran conflict could deepen Europe’s economic crisis

Eurogroup President Kyriakos Pierrakakis has warned that a prolonged conflict involving Iran, along with a potential blockade of the Strait of Hormuz, could deepen Europe’s economic difficulties.

Speaking at high-level talks in Cyprus, Pierrakakis said there is a “clear understanding” within the European Union that conditions in energy markets may deteriorate rapidly.

“If the strait is not opened in the near future, June will be worse than May, July will be worse than June,” he said.

He noted that finance ministers across the EU are working to balance support for the general population and vulnerable groups while preventing the ongoing energy crisis from escalating into a broader fiscal crisis.

Pierrakakis added that the increase in energy prices has intensified following the disruption of the Strait of Hormuz, a critical artery for global trade flows.

He also pointed out that early signs of stagflationary pressure are already emerging in the European economy. Despite this, he said the economy remains resilient and is gradually adapting to the crisis conditions.

According to the latest forecast from the European Commission, growth projections have been revised downward, with the EU economy expected to expand by 1.1% this year, the eurozone by 0.9%, and Germany by 0.6%.

By Tamilla Hasanova