I just read something that explains quite well why markets remain nervous despite the truce agreements. The European Commission is being clear: even if the United States and Iran reach a two-week ceasefire, that does not solve the underlying problem we face. We are talking about real stagflation, that uncomfortable combination of low economic growth combined with persistent inflation.

According to Financial Times, the Executive Vice President of the Commission, Dombrovskis, made it clear that uncertainty about the Middle East conflict remains enormous. The ceasefire agreement is positive for easing pressure on energy markets, of course, but it does not eliminate the fundamental risk. The Commission is preparing to revise downward its growth forecasts, which is not happening without reason.

The numbers are worrying. Before all this, the EU expected a growth of 1.4% this year. But according to the latest simulations, if energy prices take longer to normalize, we could see a slowdown of up to 0.6 percentage points. That stagflation scenario Dombrovskis mentioned is not speculation; it’s what economic models are showing.

What’s interesting is that the outlook depends heavily on when energy prices truly stabilize. If they return to pre-war levels before the end of 2026, the damage would be less. If it takes longer, then yes, we would be talking about a deeper stagflation that would affect both this year and the next. The Commission will update its official forecasts in May, so in a few weeks we will have clearer numbers. Meanwhile, geopolitical uncertainty remains the most influential factor in economic calculations.