Iran war could push energy shock into 2027, says European Central Bank vice president

OVIEDO, Spain

European Central Bank (ECB) Vice President Luis de Guindos warned that the escalating conflict involving Iran could trigger a prolonged energy price shock, weighing on growth and fueling inflation across the eurozone.

In an interview published Monday by Spanish daily El Mundo, de Guindos said the severity of the economic impact will depend on how long the conflict lasts and how far it spreads.

“The impact will be intense for both growth and inflation,” he said, describing the Middle East as a source of major uncertainty.

Under the ECB’s baseline scenario, energy prices would peak in the second quarter of 2026 before falling quickly. However, the bank is also considering more adverse scenarios that could keep oil and gas prices high until late 2026 or beyond.

“In the worst-case scenario, the situation would be deeper and only begin to slowly normalize at the beginning of next year,” he said.

Despite the risks, de Guindos said the ECB does not currently foresee a recession in the eurozone, even under more adverse scenarios, though he cautioned that projections remain uncertain.

He said the central bank will wait for data before deciding whether to raise interest rates.

Autonomy in EU payment system

Beyond the immediate crisis, he urged Europe to reduce its dependence on external powers, particularly the United States, including in financial infrastructure.

He highlighted the importance of accelerating the rollout of a digital euro, arguing it would strengthen Europe’s strategic autonomy in payments, which are currently dominated by US companies.

“The digital euro would be a type of digital currency for all of Europe included on our cellphones,” he said, adding that it would not exclude cash or other payment options.

Immigration fuels Spanish growth

Turning to Spain, where he was economy minister under the conservative government of Mariano Rajoy, he said the economy has shown strong growth in recent years, driven in large part by immigration, which he described as “essential.”

According to ECB estimates, population growth linked to immigration accounts for more than half of Spain’s recent GDP expansion, which has been twice as fast as the EU average.

However, he warned that rapid population growth is increasing pressure on housing and public services.

He also said Spain’s financial system is healthier than during past crises.

​​​​​​​De Guindos’ eight-year term as vice president of the ECB ends in May. He will be replaced by Croatian economist Boris Vujcic.