Surging energy prices exacerbate the slowdown in EU economic growth and inflation levels

The rise in energy prices affects every participant in the European economy, including businesses and households, pushing the EU economy toward slower growth and higher inflation. Dombrovskis emphasized that declining confidence, tighter financing conditions, and weak external demand are all exacerbating its direct impact. The overall economic impact will depend on how the conflict evolves, particularly regarding its effects on energy supply and infrastructure. However, due to the high deficit and debt levels of EU countries, the high interest rate environment, and the urgent need to increase defense spending, the EU has very limited room for maneuver.