Europe Watches Its Economic Recovery Fade Into the Distance

“A short-term shock is being extended in time,” said Mariano Cena, senior European economist at Barclays. The longer the disruption to energy supplies from the Persian Gulf goes on, the worse the effects get, he added.

Initially, after U.S. and Israeli forces attacked Iran, and Iran responded by closing off the Strait of Hormuz, the expectation was for what economists call a V-shaped impact, with a big but short drop in growth and a strong rebound, Mr. Cena said. Now, it’s more U-shaped, where the economy is weaker for longer and the recovery is slower. Barclays recently halved its forecast for European growth this year to 0.7 percent, with just a meager pickup to 0.9 percent next year.

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Article source: https://www.nytimes.com/2026/06/08/business/europe-inflation-iran-war.html