European Central Bank survey reveals firms' strategies amid Middle East conflict

European Central Bank: The European Central Bank is the central bank of the euro area responsible for monetary policy and financial stability oversight. It conducts the Survey on the Access to Finance of Enterprises (SAFE) to gauge firm conditions and expectations. The Q2 2026 SAFE round includes ad hoc questions on the economic effects of the Middle East conflict on euro area businesses. • ECB’s Survey on the Access to Finance of Enterprises and Corporate Telephone Survey indicate euro area firms anticipate sharply higher non‑labour input and energy costs over the next 12 months due to the Middle East war and related oil price increases, while demand and profit margins are expected to weaken. • Around one‑third of firms report seeking alternative suppliers for inputs, raw materials and components, and a similar share are looking for alternative energy sources or suppliers, reflecting efforts to reduce exposure to conflict‑linked disruptions and price spikes. • Firms are also accelerating investment in energy efficiency, with roughly 30–35% citing this as a key strategic response, particularly in energy‑intensive sectors like construction, transport and industry, to mitigate higher and more volatile fuel and power costs. • Trade‑oriented sectors, exporters and SMEs are described as most exposed, facing higher trade finance and insurance costs, greater vulnerability to tariffs and regulatory frictions, and less hedging capacity against energy and commodity shocks than large corporates. • ECB contacts report that prices in intermediate goods and transport sectors have already risen, margins have been squeezed in roughly 40% of sectors, and many firms are revising pricing contracts more frequently to pass through higher costs where possible. • Policymakers monitor these developments as a supply‑side and trade shock: rising corporate financing costs and geopolitical re‑routing of supply chains could weigh on euro area growth, with particular concern for SMEs’ access to finance and resilience if energy and shipping disruptions persist.