European leaders will meet in Brussels next Thursday and Friday, with the main topic being how to address the instability caused by the military escalation in the Middle East.
Policymakers across Europe are on high alert over the possibility of another inflation shock, as oil prices continue to surge due to the conflict in the region.
During the meeting, EU leaders are expected to discuss the situation in Iran and the wider region, as well as the geopolitical and economic consequences for Europe, particularly in relation to energy prices and energy security.
In his invitation letter to EU leaders, the President of the European Council António Costa noted that the discussions will focus on identifying the tools needed for a coordinated and effective response.
“We will discuss the situation in Iran and the wider region, as well as our response to its geopolitical and economic consequences, including energy prices and energy security. Together, we must identify the means we need to mobilise to ensure a timely, coordinated and effective response that protects our citizens and businesses, while working towards de-escalation and stability in the region,” Costa said.
The meeting will also be attended by the President of the Eurogroup Kyriakos Pierrakakis, the President of the European Central Bank Christine Lagarde, and the Secretary-General of the United Nations António Guterres.
Meanwhile, the governing council of the European Central Bank will announce its interest rate decisions in Frankfurt on Thursday. Markets currently expect the ECB to keep interest rates unchanged until 2027, given the high uncertainty surrounding developments in the Middle East and their impact on the global economy.
The governor of the Bank of Greece Yannis Stournaras warned that countries dependent on energy imports could face stagflationary pressures.
“Europe is particularly exposed to developments in fossil fuel markets, especially the natural gas market,” he said.
Authorities are also looking to the policy tools used during the 2022 energy crisis following the Russian invasion of Ukraine. Those measures included subsidies for electricity and natural gas bills, fuel subsidies, rebates on electricity charges and windfall taxes on energy companies.
Officials note that similar measures could be adapted if the current crisis continues and begins to affect households and businesses.
Future decisions are expected to depend on several factors, including the duration and intensity of the energy crisis, the strength of inflationary pressures in transport, energy and food, and the policy responses adopted at the European level.
Source: naftemporiki.gr
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