Carsten Linnemann, the secretary‑general of the CDU, warned that the Iran crisis could lead to a doubling of inflation as oil prices rise. Speaking on the news program “Welt” he explained that the current situation is already “alarming”. In late autumn the price of oil was around $60 a barrel, he noted, and it has since climbed to approximately $80. If the price reaches $100, he said, there is a substantial chance of inflation jumping to about 4 percent.
Linnemann added that this scenario would force the European Central Bank to raise interest rates, which in turn would stifle the economy. He described the situation as “very, very precarious” and urged hope that the war would not last long. According to him, the scenario is realistic and the party cannot pretend to be able to fight it all the way: “We do what we can for the industry – for example, we support industrial electricity pricing and other relief measures. But if oil prices hit $100, those measures will not hold everyone’s coats shut”.
He also highlighted how damaging this would be at a moment when the economy is beginning to pick up. “We’re experiencing a delicate sprout in industry right now. The order books are improving, overall there are more startups, and we see net inflows in direct investments”. He warned that it would be bitter if this fragile growth were erased and stressed the importance of preparing for such a scenario.