The European Union is worried about the risks to the economy of tensions in the Red Sea, in particular their possible impact on energy prices, European Commissioner for the Economy Paolo Gentiloni said on Monday. "We know that we are starting this year with moderate growth, some good news about the labour market, but also growing concerns about the risks of geopolitical tensions," Gentiloni said, ahead of a meeting of EU finance ministers in Brussels on Monday and Tuesday.
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What is happening in the Red Sea seems, for the moment, to have no impact on energy prices and inflation. But we think we need to keep a very close eye on this because these consequences could materialise in the coming weeks," he warned as the Twenty-Seven were due to discuss the economic outlook for 2024.
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Germany in recession
Germany's gross domestic product (GDP) shrank by 0.3% in 2023, following growth of 1.8% in 2022, German statistics office Destatis said on Monday. Some experts see Europe's largest economy remaining in recession this year, due to high interest rates, slowing global demand and energy costs.
Tensions have escalated in recent days in the Red Sea, where Yemen's Iran-backed Houthi rebels are attacking ships believed to be linked to Israel in solidarity with Palestinians in Gaza. In response, the United States and the United Kingdom carried out strikes against Houthi sites on Friday and Saturday.