The EU could “enter recession” with inflation of 5%. “No European country is immune”, warns the IMF, writes La Repubblica. The warning was given by Alfred Kammer, head of the European Department of the International Monetary Fund, in an analysis on the IMF Blog. For Kammer, “Europe is at a crossroads”. The burden is “an energy shock, smaller than in 2022 and this time attributed to the war in the Middle East”, which “weighs down growth and pushes inflation higher”.
Before the war, he adds, “our forecasts would have been revised upwards. However, now we are seeing a slowdown in growth. Initial data already show a weakening in investment and private consumption.”
Then he warns European countries against support measures. Italy and France, first of all, are in different circumstances than “some countries, like Denmark or Sweden,” which “with relatively low debt levels, have the necessary space to implement countercyclical fiscal policies.” The temptation, he says, is “simply to stop price increases by resorting to price caps, widespread subsidies, or cuts in fuel excise taxes.”
However, these are “unwise measures”. The unintended support, in fact, “disproportionately benefits higher-income households”, those that consume more energy. Growth prospects for the euro area are estimated at just 1.1% in 2026, while for the European Union they are 1.3%: “This forecast is characterised by a high degree of uncertainty”. The IMF estimates inflation at 2.8% in 2026, up from 2.5% in 2025.