EU economic minister warns bloc is facing 'stagflationary shock'

EU Economy Commissioner Valdis Dombrovskis warned the bloc is entering a “stagflationary shock,” saying officials are trimming growth forecasts and raising inflation projections as energy prices spike amid conflict in the Persian Gulf. The statement signals heightened short-term inflationary pressure alongside weaker growth prospects for the eurozone, a negative backdrop for European equities (Europe 50) and consumer-sensitive sectors. Markets may see further gains in energy and commodity prices, while central banks could face pressure to keep policy tighter for longer, weighing on risk assets and economic activity in the region.