Europe's economy is slowing sharply as the Iran war drives up energy costs. According to the European Commission, the euro area will slow markedly while suffering the fastest inflation since 2023 as it succumbs to the energy-cost surge.
Fresh data for May shows that business activity across the eurozone contracted at its fastest pace in more than two and a half years, hitting its lowest level in that period. The accompanying surge in energy costs is dealing a severe blow to the economy.
The slowdown is deepening as firms slash jobs and consumers pull back on spending. Intensifying inflation pressures are raising fears of a prolonged cost-of-living crunch and a possible recession, deepening pressure on households and challenging policy makers.