Events

US economic actions, on the face of it, threaten Europe’s strategic and economic wellbeing. The continent’s export industries have been roiled by the US president’s trade war, while the attack on Iran risks an inflationary surge as energy prices climb. At the same time, Donald Trump appears to be stepping back from the Atlantic alliance and has reduced support for Ukraine. Our panel addresses whether this new reality signals a death knell for the European integration project, or whether it is the catalyst Europe needs to rethink both its economic and strategic models.

The relatively closed US economy is arguably the best positioned to weather disruption stemming from the Iran war. Yet even it finds itself at an awkward juncture. As high-income households generally thrive in an environment of technological disruption and high asset prices, those in the middle and lower end are struggling due to financial strain and inflation. Will and Kai Xian explore the balance of these forces, the impacts of the war and concerns around big outflows from the private credit sector and what that means for credit transmission in the economy.

The economic fallout from the war in Iran is broadening as disrupted energy markets drive oil and gas prices higher and leave policymakers with difficult dilemmas if they are to avoid a 1970s stagflationary cycle from unfolding. Our panel considers the latest developments on the ground in the Persian Gulf and assesses what this means for the US, Europe and emerging economies.