The high cost of energy continues to bite into Italians’ pockets and the situation could worsen further if tensions in the Middle East were to continue. The International Monetary Fund is concerned both about the effects on families and on financial markets, but also about the growth of the Eurozone.
IMF, losses of up to 2,270 euros
In the updated framework presented by the IMF, the impact on domestic budgets appears significant. For Italy, the Fund estimates an average loss per family of 450 euros in the basic scenario and up to 2,270 euros in the severe scenario.
At a European level, the picture is equally worrying, with significant differences between the various countries, since some, due to their peculiarities, are less exposed to the oil price shock. During the presentation to the Eurogroup, Oya Celasun, deputy director for Europe of the Monetary Fund, summarized in these terms:
At current prices, the average EU family would lose around 375 euros in 2026, equivalent to 0.7% of average consumption, due to all price increases. The impact varies greatly, from 620 euros in Slovakia to 134 euros in Sweden. According to the “severe” IMF WEO scenario of April 2026, the average loss would rise to 1,750 euros.
On the macroeconomic front, the slowdown in the Eurozone appears increasingly likely in the base scenario. The IMF writes:
Under the baseline scenario, growth in the eurozone is expected to slow to 1.1% in 2026 and 1.2% in 2027, with inflation rising 0.7 percentage points to 2.6% in 2026 and falling to 2.2% in 2027. In April’s ‘severe’ downside scenario, the euro area could move closer to recession.
The concerns do not only concern growth, but also the dynamics of the energy and financial markets. In fact, the Fund underlines that markets are becoming more pessimistic about energy prices, with a progressive approach to the worst-case scenarios already outlined in previous forecasts.
Impact on government bonds and spreads
The impact of the energy shock is also reflected on government bonds and sovereign spreads. The IMF warns that rising yields could spread to the private sector, impacting credit quality and increasing the overall vulnerability of the European financial system.
The solutions to the problem
In terms of economic policies, the Fund calls for the need for more targeted and coordinated interventions. On the one hand, the urgency of strengthening the European single market is underlined:
The European single market agenda has become even more urgent, because it would not only increase growth in a sustainable way, but also significantly improve the resilience of European economies.
On the other hand, the deputy directors of the European department of the IMF, Helge Berger and Oya Celasun, maintain a cautious position on the use of fiscal flexibility clauses:
Exceptions to the Stability Pact only for extraordinary shocks, this is not the case.
According to the Fund, there is still room for targeted public interventions without compromising public finances:
There are ways to respond to the shock we are experiencing in a contained and prudent way. If support is targeted to those who need it, it will not cost as much and it will be easier for governments to offset it within existing budgets.
IMF against excise duty cuts
On the energy level, the spread of temporary price measures, such as the cut in excise duties on fuel, is criticized as distorting the functioning of the market. The Fund urges us to avoid policies that reduce price signals, as they could slow the economy’s adaptation to a more expensive and unstable energy environment.
Debt management
Finally, the IMF also recalls the need for more rigorous debt management in the most exposed countries. For states with high debt, the continuation of fiscal consolidation paths is indicated, while for those with greater margin, a more flexible management of automatic stabilizers is suggested.
