Paris, April 08 (QNA) - Amid escalating geopolitical tensions in the Middle East, energy security has once again become a prominent issue in Europe's economic landscape, particularly in France, which is facing a new wave of inflationary pressures.

This wave is not solely linked to rising prices but reflects a complex set of compounded shocks, where political factors intersect with energy challenges and have direct repercussions on citizens' daily lives. This makes the impact more profound and multifaceted than in previous crises.

The global rise in energy prices has directly impacted the French economy, with transportation, food, and service costs experiencing significant increases, coinciding with a decline in household purchasing power, especially among low-income groups.

These repercussions have not been limited to consumers but have extended across various productive sectors, including transport, agriculture, and fisheries. Rising energy costs have driven up production expenses, placing clear pressure on profit margins amid growing difficulties in adapting to these rapid economic shifts. As a result, concerns are mounting over slowing economic growth and rising inflation rates, especially as higher energy costs are passed on to the final prices of goods and services.

Businesses, particularly small and medium-sized enterprises (SMEs), are also facing increasing pressure due to supply chain disruptions and their heavy reliance on fuel. This leaves them with difficult choices: either raise prices and pass the cost on to consumers, or absorb losses. This, in turn, impacts investment levels and the overall stability of the economy.

In this context, French analysts and economic experts confirmed to Qatar News Agency (QNA) that the war in the Middle East has had a direct impact on the French economy through rising energy prices and supply chain disruptions, leading to increased inflationary pressures and reduced household purchasing power.

They stressed that the continuation of these geopolitical tensions could push the French economy into a more fragile phase, characterized by slower growth and higher inflation, amid limited government capacity for financial intervention due to high debt levels and budgetary constraints.

In this context, political analyst and strategist at the Institute for International and Strategic Affairs (IRIS) in Paris Brahim Oumansour explained that the war against Iran and escalating tensions in the Middle East have had wide-ranging global economic repercussions, which have directly impacted the French economy.

French institutions, he noted, have begun to face increasing difficulties, manifested in slower economic growth and higher production costs, particularly in light of the sharp rise in gas and oil prices linked to the global energy crisis.

He added that the strategic importance of the Middle East as a major energy source for the global economy means that any instability there is quickly reflected in international markets. He explained that this crisis comes at a time when the French economy is already fragile, due to the accumulation of multiple crises, from the global financial crisis to health and political crises, as well as internal challenges affecting economic stability.

He considered that limited economic growth in France makes it difficult to absorb new shocks under such complex conditions.

Regarding the direct impacts, he pointed out that the energy crisis has led to a significant increase in fuel prices, affecting transport and logistics costs and contributing to higher prices of essential goods.

French institutions are facing a state of uncertainty, weakening their ability to invest and reducing confidence in the future, particularly within a complex economic and political environment, he noted.

He highlighted that the repercussions are not limited to companies but have extended to citizens, with a marked decline in purchasing power, especially among groups heavily dependent on fuel in their daily activities, such as farmers and fishermen, as well as professions requiring constant mobility like doctors and nurses.

The rising gasoline prices, he added, have pushed many consumers to seek alternative solutions, such as using price-comparison apps or traveling longer distances to obtain cheaper fuel.

He further indicated that these pressures could lead to a resurgence of social protests, given the sensitivity of fuel prices in French society and the memory of past unrest triggered by similar increases.

He added that the French government has provided limited support to certain institutions, particularly SMEs and strategic sectors, but such assistance remains insufficient relative to the scale of the crisis, especially amid financial constraints and rising debt levels.

He also pointed out that continued uncertainty over developments in the Middle East is exacerbating concerns, as a prolonged or escalating conflict could lead to more severe repercussions, particularly if maritime traffic in the Strait of Hormuz, a vital artery for the global economy, is affected.

He warned that continued increases in oil prices could lead to the closure of a number of companies, particularly those lacking sufficient financial reserves to withstand such shocks.

For his part, political analyst and professor of political economy at Sorbonne University Jamal bin Kreid said the war's impact on the purchasing power of French citizens has been markedly negative, both socially and financially.

He explained that austerity policies adopted by successive governments, coupled with the repercussions of the war, have exacerbated inflationary pressures, driving up the prices of goods and services and further weakening household purchasing power.

He emphasized the central role of energy markets in this dynamic, noting that the Strait of Hormuz represents a strategic choke point for the transport of crude oil and liquefied natural gas, and one of the world's most vital energy trade routes. Any disruption in this area, he said, is quickly reflected in energy prices and, by extension, the global economy, including France.

He added that energy price volatility directly affects daily life, while rising global energy costs also weigh on investment and economic activity. Major companies are increasingly forced to secure additional financing, often at higher costs, adding to their financial burdens and constraining investment plans.

He described the current crisis as an external shock comparable to the 1973 oil crisis, noting that international firms are now required to maintain sufficient liquidity to sustain operations, at a time when high energy costs are dampening investment and deepening the economic slowdown. He also pointed out that France has had to increase its energy imports, particularly from Algeria.

At the same time, he noted that some major energy companies have benefited from the crisis, highlighting that TotalEnergies has posted substantial profits since the outbreak of conflicts in the Middle East, underscoring a stark contrast between declining household purchasing power and corporate gains.

On government policy, he said authorities are attempting to implement a range of measures to address the crisis. However, France's response remains limited in both scope and duration, largely consisting of short-term actions aimed at mitigating immediate effects, such as drawing on strategic reserves, boosting refining capacity, coordinating with fuel distributors, and strengthening oversight of fuel stations to ensure pricing transparency.

Meanwhile, political analyst and economic and financial expert Dr. Kamil Al Sari, stated that France, like other European countries, is directly affected by the repercussions of the war on Iran, particularly through maritime traffic in the Strait of Hormuz, a key route for oil and gas shipments from the Middle East.

He noted that these flows remain highly vulnerable to geopolitical fluctuations, leaving markets exposed to ongoing disruptions.

Al Sari added that energy prices have already risen by around two percent, with further increases expected, stressing that the impact extends beyond energy to include fertilizers, industrial inputs, and imported goods, thereby intensifying pressure on companies and the broader economy.

He highlighted the deep interconnectedness of the global economy, which makes self-sufficiency difficult to achieve. Despite France's reliance on nuclear energy, accounting for around 60 percent of its electricity production, it still depends on imported fuel and gas, particularly from the Middle East.

He warned of the risk of entering a period of stagflation, where slowing economic growth coincides with rising prices, estimating the potential economic cost at around EUR 120 billion. He added that rising fuel prices remain the most immediate burden on daily life, particularly in the transport and services sectors.

He noted that the most affected groups include taxi and truck drivers, as well as farmers, while the state has allocated limited support of around EUR 60 million to these segments. He also pointed to mounting pressure in the agricultural sector, where higher fuel and fertilizer costs could expose some producers to the risk of bankruptcy.

He added that the continuation of the crisis could lead to a contraction in GDP of around 0.5 percent amid already modest growth, while also reducing tax revenues and increasing debt burdens, further constraining government policy options.

He stressed that rising energy prices are driving up production and transportation costs, feeding through to higher prices for food and consumer goods, even basic items, due to their reliance on oil-based supply chains.

He noted that government measures include energy conservation efforts, promotion of remote work, and limited support for certain sectors, while proposals such as reducing fuel taxes remain unlikely due to their high fiscal cost.

He also highlighted that the strengthening of the US dollar against the euro is increasing the cost of energy imports, as oil and gas are priced in dollars, adding another layer of pressure on the French economy.

He concluded that the French economy is facing complex challenges stemming from the overlap of external shocks and internal constraints, including high debt levels and growing external dependence, leaving it exposed to volatile factors that are difficult to control and creating an uncertain outlook.

In light of these developments, France is entering a delicate economic phase that requires a careful balance between protecting household purchasing power and addressing rising energy costs, while ensuring overall economic stability. The effects of the war on Iran are extending across transport, agriculture, industry, and services, necessitating proactive and multi-dimensional policy responses.

Economic analyses suggest that the coming period will be a real test of the ability to manage external shocks, underscoring the need to strike a sustainable balance between economic growth and social protection amid global market volatility and the close link between energy security and financial and social stability. (QNA)