The global economy is going through a moment of complete instability and uncertainty. This panorama is largely attributed to the war unleashed in the Middle East.
Before the start of the conflict, 20% of the world’s oil and a significant amount of natural gas moved through this maritime passage. This is stated by Seamus Boland, president of the European Economic and Social Committee, in an interview for Politico.
“The increase in energy costs is having an impact on thefood, transportation and housing, hitting low- and middle-income households hardest”, he declares.
In this same sense, the European Commissioner for Economy, Valdis Dombrovski. “As the blockade of the Strait of Hormuz persists, it is clear that its repercussions are deepening and, according to some, spreading to the broader economy.”he points out.
At a macroeconomic level, the current situation has aggravated the financial balance of European nations; Dombrovskis is aware of this. “We are facing stagflation: economic slowdown and rising inflation at the same time”details.
Various perspectives of the EU
The tense financial environment has opened a debate regarding the way in which the European Union should manage its budget of 1.8 trillion euros for the period 2028-2034.
On the one hand, northern countries want to control spending and allocate more funds to defense. While, for their part, southern nations argue that they need economic support. It is worth mentioning that from 2028 Brussels must begin to pay off a joint debt of 25,000 million euros annually that it issued to address the economic consequences of the COVID-19 pandemic.
underlines the importance of having financial support from the EU, taking into account that there are already accumulated deficits.
“We went into debt during the pandemic. Today some tell us that we have to pay quickly. It’s idiotic“. Sentence. Finally, the French executive emphasizes taking action in this regard, taking into account the international position that some governments have towards Europe.
“We should not underestimate that this is a unique moment in which an American president, a Russian president and a Chinese president are totally against the Europeans. So, this is the right time for us to wake up.”he concludes.
