{"text":[[{"start":9.43,"text":"The EU will still be hit by a “stagflationary shock” of low growth and rising inflation despite the US and Iran agreeing a two-week ceasefire, the bloc’s top economic official has warned. "}],[{"start":25.13,"text":"EU economy commissioner Valdis Dombrovskis said the European Commission is preparing to cut its growth forecast for this year as the fallout from the Middle East conflict remains highly uncertain."}],[{"start":39.47,"text":"“It’s certainly a welcome step towards de-escalation and is also expected to bring relief as regards the energy crisis,” Dombrovskis said of the ceasefire in an interview with the FT."}],[{"start":50.91,"text":"But he warned that “on the economic impact of war in Iran, of course, it’s still subject to high uncertainty” and it is “clear that we are facing a stagflationary shock”."}],[{"start":63.66,"text":"The Commission will update its official GDP forecast in May. Before the conflict began, it had forecast EU growth to remain at 1.4 per cent this year and 1.5 per cent in 2027, with inflation slightly above 2 per cent this year and next."}],[{"start":82.1,"text":"But recent economic scenarios run by the Commission estimate growth could slow by up to 0.4 percentage points this year if energy prices return to pre-Iran war levels by the end of 2026. Growth could slow by 0.6 percentage points both this year and next if energy prices take longer to return to prewar levels, according to the analysis shared with the FT. "}],[{"start":106.94,"text":"Inflation is also expected to increase by up to one percentage point this year in the commission’s first scenario, and by up to 1.5 percentage points both this year and in 2027 in the latter scenario. "}],[{"start":122.82,"text":"Investors have warned that a lasting decline in oil and gas prices will depend on whether Tehran releases its grip on the crucial Strait of Hormuz export route beyond the two-week ceasefire. "}],[{"start":138,"text":"The FT reported on Wednesday that Iran will demand that shipping companies pay tolls in cryptocurrency for oil tankers passing through the strait as it seeks to retain control of the waterway during the ceasefire."}],[{"start":153.28,"text":"Several EU countries including Italy, Poland and Spain have introduced measures such as cutting fuel taxes to shield their industries and households from higher energy prices. "}],[{"start":167.02,"text":"Dombrovskis reiterated that member states should not turn the energy crunch into a fiscal crisis through excessive spending."}],[{"start":175.77,"text":"“We have more limited room for fiscal manoeuvre than we used to have” and therefore “need to have measures which are clearly temporary and targeted with limited fiscal impact”, Dombrovskis said."}],[{"start":188.65,"text":"The Commission will in June assess whether countries are on track to meet their debt and deficit reduction targets, and whether to further so-called “excessive deficit procedures” against countries that have not reduced their deficits to agreed levels. "}],[{"start":204.69,"text":"The excessive deficit procedure carries an economic stigma and could eventually result in financial sanctions from the EU."}],[{"start":213.82999999999998,"text":"Italy had been hoping to exit the procedure this year. But two EU officials warned that this was now unlikely after Italy’s statistical agency said recently that the country’s deficit came in at 3.1 per cent of GDP last year — above the EU’s requirement of “below 3 per cent”."}],[{"start":233.76,"text":"Since the start of the Iran war, Rome has called on Brussels to temporarily lift its fiscal rules through a “general escape clause”. This was triggered during the Covid-19 pandemic to allow governments to spend their way out of the crisis. "}],[{"start":250.83999999999997,"text":"Italian Prime Minister Giorgia Meloni said on Thursday that if the Middle East crisis escalated further, “we should seriously consider the issue of a European response similar in approach and tools to that deployed to respond to the pandemic”."}],[{"start":268.23999999999995,"text":"But Dombrovskis said a “general escape clause is there to address a severe economic downturn in the EU or Euro area . . . currently we are not in this scenario”."}],[{"start":279.96999999999997,"text":"Additional reporting by Amy Kazmin in Rome"}],[{"start":293.60999999999996,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1775727031_8668.mp3"}