EU Considers Freezing Deficit Rules as Iran War Threatens Stagflation

Italy's EU Affairs Minister said the EU could freeze its 3% deficit rules if the Iran conflict persists. The ECB warned that a prolonged conflict could trigger stagflation and push Germany and Italy into recession by year-end. European gas prices have risen over 70% since the war began. The Commission separately warned that energy prices will not immediately normalize even if fighting stops. Eurozone manufacturing PMI rose to 51.6, a 45-month high, but input cost inflation hit a 41-month high on surging energy costs.