Barclays Halves Europe 2026 Growth Forecast to 0.7% as Hormuz Disruption Lifts Energy Costs
Updated
Updated · The New York Times · Jun 8
Barclays Halves Europe 2026 Growth Forecast to 0.7% as Hormuz Disruption Lifts Energy Costs
1 articles · Updated · The New York Times · Jun 8
Summary
Barclays cut its 2026 euro-area growth forecast to 0.7% from about 1.4%, saying the region now faces a weaker-for-longer slowdown rather than a brief shock.
More than three months after the Middle East war began, higher energy prices and Iran's closure of the Strait of Hormuz are still disrupting Persian Gulf supplies and extending the drag into next year.
Barclays now expects only a modest rebound to 0.9% in 2027, with higher inflation and interest rates likely to persist and keep pressure on household spending and business investment.
Europe is entering the shock with little cushion after Russia's 2022 invasion of Ukraine triggered a gas crunch, double-digit inflation and aggressive rate hikes that already restrained growth.
After the 2022 shock, why does Europe's economy remain so fragile and dependent on volatile energy imports?
With budgets strained and rate hikes likely, is Europe powerless to prevent a long and painful economic slump?
The 2026 Hormuz Disruption: Europe’s Economic Crisis and the Race Toward Energy Independence
Overview
The 2026 Iran war, initiated by the United States and Israel, directly triggered the disruption of the Strait of Hormuz, a vital global energy route. This escalation led to widespread violence and significant civilian casualties in Iran and Lebanon, spreading instability across the region. As a result, Europe faced a sharp economic shock, with consumer confidence plunging and energy prices soaring. The crisis exposed Europe’s vulnerability to external energy disruptions, prompting urgent policy responses and accelerating the continent’s commitment to green energy and long-term energy security strategies.