Europe is once again discovering that moral postures are not an energy policy. For years, the continent congratulated itself on its virtue, mistaking dependency for strategy and rhetoric for sovereignty. It severed or weakened access to cheaper and more reliable energy, aligned itself mechanically with Washington’s geopolitical impulses, and convinced itself that liquefied natural gas bought at a premium from the United States or the Gulf was the price of principle. Today, the bill has arrived, and, as ever in Europe, it arrives without a solution.

The war with Iran has turned that strategic negligence into an economic penalty. Oil and gas prices have surged, supply chains have tightened, sentiment has deteriorated, and the old European weakness has reappeared in its most familiar form: slower growth and faster inflation at precisely the same moment. That combination is particularly poisonous for a continent already exhausted by the after-effects of the Ukraine shock. Europe was only beginning to imagine a modest recovery. Instead, it now finds itself dragged back towards the very emergency reflexes it had hoped to leave behind: subsidies for households, rescue measures for industry, and central banks once again forced to think less about supporting activity than about containing prices.

Germany, unsurprisingly, is at the centre of the problem. The industrial model that once fed on abundant energy is now discovering what ideological energy policy costs in practice. Chemical producers, among the most exposed to energy prices, are already cutting production. SKW Piesteritz, home to Germany’s largest ammonia plant, has reduced output to a technical minimum. Evonik, more cautious in language, is no less exposed in substance. The first victims are always the energy-intensive sectors. The rest follow later, through margins, prices and demand. Berlin knows the danger. Internal German scenarios now suggest that growth in 2026 could be cut roughly in half if the conflict persists, from 1% to as little as 0.5%. Even less severe assumptions imply only 0.6% to 0.7%. For a country already struggling to emerge from stagnation, this is not a cyclical inconvenience. It is a strategic setback. And the politics become uglier from there. A weaker economy means weaker tax revenues. Weaker revenues mean harder fiscal choices. Germany is already trying to fund infrastructure, defence and competitiveness reforms while managing a large budget gap through the rest of the decade. The discussion has therefore moved, almost inevitably, towards what German conservatives traditionally pretend never to consider: tax rises. Even the possibility of increasing VAT, once taboo, now circulates in the background. In parallel, support packages for consumers are being considered, because no government can sit by and watch energy prices rise without fearing electoral consequences. Thus, Europe repeats its ritual: self-inflicted dependency followed by expensive compensation.

Italy offers the same drama in a more fragile register. Rome is preparing to lower its own growth forecasts, potentially to 0.5% for 2026. That may sound modestly disappointing. In political terms, it is much worse. Giorgia Meloni had benefited from an unusual conjunction of favourable factors: a relatively stable coalition, sounder fiscal optics, and lower borrowing costs. War has begun to disturb that delicate machinery. Italy, as the second-largest gas consumer in the European Union and still heavily reliant on gas in its energy mix, is acutely exposed. Higher energy prices threaten growth, household bills and market confidence at once. And for Italy, market confidence is never a detail. The widening spread between Italian and German borrowing costs may still be far from panic territory, but it is a reminder that debt-heavy countries are never entirely sovereign in a crisis. They are merely tolerated — until the markets begin to reconsider the price of tolerance.

This is the broader European trap. Inflation rises, but growth fades. Central banks cannot rescue activity without appearing to validate inflation. Governments cannot fully protect consumers without worsening deficits. Only Germany possesses significant fiscal room, and even Germany is discovering that room disappears quickly when energy shocks become structural rather than temporary. Meanwhile, businesses are already doing the arithmetic that governments prefer to postpone. Hapag-Lloyd speaks of tens of millions of dollars in additional costs per week. Retailers such as Next are openly discussing price increases if the conflict endures. H&M warns that a prolonged war could weaken consumption through the energy channel alone. The chain is obvious: higher transport costs, higher input costs, higher retail prices, weaker real incomes, lower demand. Europe has seen this film before. The disturbing part is that it seems to have learnt almost nothing from the first screening.

The strategic mistake lies not merely in being exposed to energy shocks — all industrial economies are exposed — but in having reduced optionality while pretending to increase resilience. Europe replaced dependence on a single set of suppliers with dependence on more expensive, logistically fragile alternatives, then wrapped the whole arrangement in the language of values. What it did not build was genuine autonomy: not in production, not in infrastructure, not in financing, and certainly not in geopolitical influence. And that is why today’s costs are so high. Europe pays more for energy, more for transport, more for industrial inputs, more for fiscal protection, and potentially more for money itself if the ECB is forced into a tighter posture. It bears the economic burden of a conflict it does not control, in support of a strategic line largely defined elsewhere, while lacking both the hard power to shape events and the energy sovereignty to protect itself from them. That is not a strategy. It is dependent on moral decoration.

The immediate consequence is stagflationary pressure. The longer-term consequence is more corrosive: a further weakening of Europe’s industrial base, deeper political fragmentation, and renewed strength for populist forces that feed precisely on the gap between elite rhetoric and household reality. In Germany, the AfD waits. In Italy, political room narrows. In Britain, the same pressures are evident in debt, inflation, and shrinking fiscal flexibility. Across the continent, the voter is once again being asked to finance a strategy he was never truly allowed to debate. And so Europe arrives at the point it should have anticipated years ago: paying premium prices for energy, subsidising consumers to survive them, considering tighter monetary policy to achieve weaker growth, and still lacking a credible route out. That is the true cost of strategic imitation. Not merely that Europe aligned itself too eagerly with Washington’s worldview, but that it did so while dismantling the cheap-energy foundations of its own competitiveness and without building anything solid enough to replace them. Now the continent is left with the worst of both worlds: the costs of confrontation, and none of the benefits of control.