As Europe enters mid 2026, the European economy is once again operating in an environment marked by heightened geopolitical tensions and elevated uncertainty. The conflict in the Middle East has disrupted shipments through the Strait of Hormuz and led to the closure or damage of critical energy infrastructure. As a result, energy prices have surged and supplies of key inputs – including oil, gas and fertilisers – have been disrupted. These shocks hit an economy that had shown resilience prior to the conflict, but where unresolved structural challenges persist and investment dynamics remain insufficient relative to Europe’s long term needs.

In our European Economic Outlook, published at the event, we have placed a particular focus on what this shock means for the Euro area economy and the policy choices ahead. Inflation and inflation expectations move back to centre stage, putting renewed focus on the monetary policy outlook. At the same time, fiscal policy is again called upon to cushion the impact of higher energy costs, while rising security, infrastructure and climate-transition needs bring renewed urgency to Europe’s long standing investment challenge. The discussion also focused on possible scenarios for the European economy.

The event followed this format:
- Presentation of BDI’s Economic Outlook by Frederik Lange, Deputy Director Economics, BDI

Comments and contributions on the Outlook by:
- Boris Kisselevsky, Head of the ECB Representation in Brussels, European Central Bank

• Karel Lannoo, Chief Executive Officer, CEPS

Open discussion on the Outlook and policy responses
- Dr. Klaus Deutsch, Director Economics, BDI moderated the event.