Households, businesses and investors should prepare for conditions resembling the stagflation that paralysed major economies in the 1970s, Nigel Green, chief executive of deVere Group, one of the world’s largest independent financial advisory organisations, warned on Tuesday as fresh data confirmed a sharp deterioration in eurozone business activity.
The warning came as S&P Global’s flash Purchasing Managers’ Index (PMI) for the eurozone fell to 50.5 in March, a 10-month low, sharply down from 51.9 in February. The composite index, which covers both manufacturing and services, sits just above the 50.0 threshold that separates expansion from contraction, and is now consistent with quarterly eurozone economic growth of less than 0.1 percent, according to S&P Global’s own assessment.
The primary driver is the conflict in the Middle East involving Iran. Input prices across the eurozone accelerated at their fastest pace since February 2023, with the 10.6-point jump in the manufacturing input cost index described as the largest on record. Supply chain disruptions linked to shipping constraints have intensified sharply, with supplier delivery times reaching their longest since mid-2022.
“The figures show the severe impact the Iran war is already having on the eurozone economy,” Green said, drawing a direct parallel to the oil price shocks of the 1970s, which ended the post-war expansion across the United States, Canada, Western Europe and Japan. He described the combination of rising costs and fading demand as toxic, noting that central banks face a fundamental dilemma: raising interest rates to control inflation risks accelerating the slowdown, while cutting them to support growth risks reigniting price pressures further.
The European Central Bank (ECB), in projections released last week, revised its 2026 growth forecast to 0.9 percent and flagged inflation risks skewed to the upside if energy prices remain elevated. S&P Global’s chief business economist Chris Williamson said the PMI data indicate that consumer price inflation could accelerate toward 3 percent in the months ahead, placing the ECB in a position where neither tightening nor easing is straightforward.
The conflict prompted the closure of the Strait of Hormuz on March 4, 2026, an event that immediately removed a significant share of the world’s liquefied natural gas and crude oil from the market. Brent crude has since pushed above 120 US dollars per barrel, with France’s composite PMI falling into contraction territory at 48.3, while Germany’s broader economy faces strain despite a temporary boost from defence-related manufacturing orders.
Green urged investors to shift portfolio positioning toward assets with proven inflation resilience, including commodities, energy producers and companies with strong pricing power. He cautioned that cash loses value in real terms under sustained inflation and that bonds may not offer their traditional protection if price pressures persist. Currency volatility is also expected to rise as the divergence in economic performance between regions widens.
“Complacency is the biggest risk,” Green said. “Investors who act decisively, diversify intelligently, and prioritise real returns over nominal gains will be best positioned to protect and grow wealth in the period ahead.”
The duration of the conflict remains the central variable. A swift resolution could allow energy prices to retreat and PMI readings to recover by the end of 2026. A prolonged war would sustain pressure on energy markets and fundamentally alter the economic trajectory of Europe and energy-import-dependent economies across Asia.
