Iran war squeezes Europe’s economy as growth slumps, prices surge
Summary
Europe’s economy is slowing down because the war in Iran has made energy more expensive. Business activity in the eurozone shrank in May, and inflation rose, causing worries about a long-lasting rise in living costs and a possible recession.Key Facts
- The war in Iran has caused energy prices to rise sharply in Europe.
- Eurozone business activity fell at its fastest rate in over two years in May.
- Inflation in the eurozone increased, putting more pressure on living costs.
- The European Commission lowered its growth forecasts for the eurozone economy.
- Germany and France experienced drops in private sector activity due to higher fuel and energy costs.
- New orders and exports across the eurozone’s private sector declined significantly.
- Services activity, which is very important to the European economy, contracted the most since February 2021.
- The situation is making it harder for central banks to decide on interest rates and for governments to support consumers.
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