The European Central Bank has published an analysis of its Survey on the Access to Finance of Enterprises for the second quarter of 2026, finding that the Middle East conflict primarily raised euro area firms’ expectations for costs, prices and wages while weakening expected demand and profits. Trade firms, exporters and small and medium-sized enterprises reported the greatest exposure, with 35% of SMEs and 28% of large firms rating their exposure above seven on a scale of one to 10. A net 79% of firms attributed higher input cost expectations to the conflict, while net shares of 58% and 43% reported higher expectations for selling prices and wages, respectively. A net 40% reported lower profit expectations and 14% expected weaker demand, although the overall effects on employment, hours worked and investment were close to zero. Highly exposed firms reported weaker turnover, investment and employment growth expectations than firms surveyed before the conflict. About two-thirds of respondents had taken or planned action, most commonly by seeking alternative input suppliers, accelerating investment in energy efficiency or renewables, and finding alternative energy sources.
2026-09-21European Central Bank
European Central Bank finds Middle East conflict lifting euro area firms’ cost and price expectations
European Central Bank survey analysis found that the Middle East conflict raised euro area firms’ cost, selling price and wage expectations, with trade firms, exporters and SMEs reporting the greatest exposure. Expected demand and profits weakened, particularly among highly exposed firms. About two-thirds of respondents were seeking alternative suppliers, investing in energy efficiency or renewables, or finding alternative energy sources.