The Iran war is dashing Europe’s growth ambitions

A “full-blown energy shock” from a lengthy Iran conflict could “choke all the long-term competitiveness debates,” said Sander Tordoir, the chief economist at the Centre for European Reform. “The European Council, European leaders, the [European] Commission, will just be scrambling and in an immediate crisis mode.”

Efforts to make the region more competitive, the recovery from the Russia-Ukraine energy shock and a pivot toward expansionary fiscal policies all drove optimism that Europe’s economy would gain “a little bit of steam this year,” said Tordoir. That was before the conflict. 

“It’s quite bitter,” he added. “The Iran war may derail the green shoots that you could see.”