Philip R. Lane: Introductory remarks

It is a pleasure to be here for this timely exchange of views on the economic and fiscal implications for Europe of the situation in the Middle East.

I will focus my remarks today on the implications for euro area economic activity and inflation, and for our monetary policy response.

The peace agreement in the Middle East is welcome, but the situation remains fragile, with risks of setbacks or re-escalation. The full implications of the war for medium-term inflation and growth will depend on the intensity and duration of the energy price shock, and on the scale of its indirect and second-round effects.

Let me start by reviewing the implications of the energy crisis for economic activity and the outlook from this point on.

The euro area economy unexpectedly contracted in the first quarter of this year, by 0.2 per cent, due to a contraction in measured national activity in Ireland. Excluding Ireland, the euro area economy grew by 0.3 per cent, supported by domestic demand and exports. Public and private consumption contributed positively, while investment and inventories declined.

However, the war in the Middle East is weighing on activity. Thus far, there has been a more pronou

Fuente original: Banco Central Europeo (https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp260623~c112a749e2.en.html)