POLITICO: Rising prices and Hormuz Strait threat could trigger EU crisis

European leaders are increasingly concerned that tensions between the United States and Iran could go beyond an economic shock and develop into a political crisis for what has been described as the European Union’s “fragile centre.”

Amid rising energy prices and slowing economic growth, EU governments are preparing for a crisis scenario that they may not be able to fully control and which could weaken the political mainstream across the bloc, Caliber.Az reports, citing POLITICO.

“Energy costs are cascading into food, transport and housing, hitting lower- and middle-income households hardest,” Seamus Boland, head of the European Economic and Social Committee (EESC).

The committee brings together trade unions and advises the European Commission on economic and labour policy.

“Politically, that creates space for distrust — not just of national governments, but of European institutions’ ability to shield citizens from external shocks. It risks accelerating support for more protectionist or inward-looking approaches,” Boland added.

EU Commissioner for Economy Valdis Dombrovskis, meanwhile, said the consequences of a potential closure of the Strait of Hormuz are becoming increasingly tangible and are affecting the entire EU economy.

He noted that fiscal space within member states is now more limited than after the COVID-19 pandemic and the first energy crisis, warning of a potential “stagflation” — a combination of high inflation, weak growth, and rising unemployment.

The European Commission is preparing an updated economic forecast for May.

Previous projections expected EU GDP to grow by 1.4% in 2026, with inflation at around 2%.

However, under an adverse scenario involving prolonged high energy prices, growth could slow to 0.8% while inflation could rise to 4.5%.

By Bakhtiyar Abbasov