The European Commission has significantly revised down its economic forecast for the current year. In its latest autumn projections, the Brussels authority stated that the EU is now expected to grow at 1.1 percent in 2026 and 1.4 percent in 2027. This represents a noticeable drop from the initial expectation of 1.4 percent of growth for the current year.
The Commission provided specific outlooks for major regions. For the Eurozone, growth is projected at 0.9 percent in 2026 and 1.2 percent in 2027 (down from previous estimates of 1.2 percent and 1.4 percent). Germany saw the most substantial downgrade, with the Commission halving the growth forecast for 2026 from 1.2 percent to 0.6 percent. For 2027, the German economy is still anticipated to grow by 0.9 percent.
Inflation forecasts also show adjustments. The EU is expected to reach 3.1 percent in 2026, marking a full percentage point increase compared to previous projections. This rate is expected to decline to 2.4 percent in 2027. Within the Euro area, inflation is estimated at 3.0 percent in 2026 and 2.3 percent in 2027.
These revisions are largely attributed to the conflict in the Middle East, which has triggered a substantial new energy shock. Before the conflict broke out in February 2026, the EU economy was on a course of moderate growth and falling inflation. However, the situation changed dramatically with strong increases in energy prices, causing economic activity to slow. As a net energy importer, the EU is particularly vulnerable to the energy shock. Rising energy costs translate into higher household utility bills and increasing business operational costs, which are diminishing profits across multiple industries and diverting income out of the EU’s economies toward energy exporting countries.
EU Economic Commissioner Valdis Dombrovskis stated, “The conflict in the Middle East triggered a severe energy shock, placing Europe-within an already volatile geopolitical and trade environment-before further challenges”. He added that the EU must learn from past crises by providing targeted, time-limited financial support and further reducing its dependence on imported fossil fuels.