The European Parliament's Economic and Monetary Affairs Committee on 23 June 2026 held an exchange of views on the economic and fiscal implications of the Middle East crisis, revealing divergent approaches between ECB and Commission officials on one side and some MEPs on the other. ECB Executive Board member Philip R. Lane defended the central bank's rate hikes as appropriate given persistent inflation, while S&D MEP Thomas Bajada questioned the reliance on rate increases for supply-driven price pressures. Lane noted the euro area economy grew 0.8% in 2026 with inflation at 3.2% driven by energy, but stressed the labour market remains resilient and the ECB raised rates based on a data-dependent approach.
European Commission Director General Maarten Verwey presented the spring forecast revising EU growth down to 1.1% and inflation up to 3%, cautioning against untargeted fiscal measures like those in 2022 (2.1% of GDP) and highlighting limited fiscal space due to higher debt and defence spending. OECD Director Åsa Johansson outlined two scenarios: a time-limited disruption with gradual recovery, and a prolonged disruption severely cutting growth; she noted most member states' support measures remain broad-based and untargeted, urging temporary, targeted support and reduced fossil fuel dependence. EPP MEP Luděk Niedermayer questioned why the energy price impact was milder than feared; Verwey cited well-supplied markets, strategic reserve releases, and adaptability.
The debate exposed a cleavage between those favouring continued monetary tightening and those advocating for more flexible fiscal rules. Bajada raised concerns about disproportionate impacts on islands like Malta, asking the Commission about greater flexibility on state aid and consumer support. The ECB's stance benefits savers and financial stability but increases borrowing costs for governments and businesses, potentially slowing investment. The Commission's call for targeted support favours fiscal discipline but may leave vulnerable households and energy-intensive industries exposed. The OECD's push for reduced fossil fuel dependence aligns with climate goals but requires upfront investment. Next steps: the committee will continue monitoring the situation, with the Commission proposing to expand the national escape clause for defence and energy security spending.