In a written answer to a parliamentary question from Renew MEP Ilhan Kyuchyuk, Commissioner Valdis Dombrovskis on 4 August 2026 outlined the Commission's approach to combating inflation and the risk of stagflation, stressing that a more expansionary fiscal stance would fuel inflation and further erode consumers' purchasing power. The answer, delivered on behalf of the Commission, signals a preference for targeted, temporary measures over broad stimulus, while acknowledging the need to protect vulnerable households and support exposed sectors.
The question, tabled by Kyuchyuk, cited euro area inflation at 3% in April 2026 and the sharpest monthly increase since 2022 in March, raising concerns about growth, purchasing power, and competitiveness. Dombrovskis responded that the Middle East conflict has triggered a renewed energy shock, but noted that the Spring 2026 Forecast projects slower growth and higher inflation. He highlighted that following the US-Iran Memorandum of Understanding in June, oil prices dropped sharply, helping to bring euro area inflation down from 3.2% in May to 2.8% in June. However, he cautioned that re-escalation of the conflict could affect the inflation outlook.
The Commissioner pointed to structural adjustments, particularly the rapid expansion of renewable energy generation, as mitigating the severity of the shock, and stressed the need to accelerate the transition towards a more resilient and less fossil fuel-dependent economy. To ensure coordination, the Commission has adopted a Temporary State aid Framework for the Middle East crisis, enabling Member States to support the most exposed sectors in a targeted and temporary manner. Additionally, the AccelerateEU Communication proposes actions and practical examples to protect citizens from the energy shock and accelerate the energy transition.
Dombrovskis emphasised that fiscal measures can provide relief but cannot address the shortfall in energy supply. He urged Member States to ensure that emergency measures are temporary, targeted, timely, proportionate, and fiscally sustainable, and that they do not increase demand for fossil fuels. The answer does not introduce new numerical targets or deadlines, nor does it propose new instruments for SMEs or a specific EU-wide investment and productivity stimulus package, instead reaffirming existing frameworks and the importance of fiscal discipline.
The response reflects a policy orientation that prioritises price stability and fiscal sustainability over expansionary stimulus, a stance that may diverge from those calling for more flexible budgetary rules and new support mechanisms for SMEs. The Commission's position suggests that future policy will focus on energy transition and targeted aid rather than broad fiscal expansion. Institutional follow-up may include further guidance on the use of the Temporary State aid Framework and continued monitoring of inflation and energy prices, with possible adjustments should the conflict escalate again.