• The European Commission warns the bloc could lose 1.0 to 1.3 million jobs in 2026 due to energy cost spikes linked to the Iran conflict.
  • The automotive sector faces the highest risk, with up to 600,000 jobs threatened, followed by construction, chemicals, metals, and other energy-intensive industries.
  • Higher energy prices are squeezing production costs and competitiveness, with limited policy responses so far.

The European Commission has issued a stark warning: the EU could lose up to 1.3 million jobs this year as soaring energy prices, fueled by the U.S.-Iran conflict, hammer industry. According to Labour Commissioner Roxana Minzatu, the automotive sector is the most vulnerable, with up to 600,000 positions at risk. Construction, chemicals, metals, transport, batteries, solar manufacturing, and steel are also facing significant layoffs.

Industrial energy costs in Europe have surged, pressuring production across manufacturing and energy-intensive sectors. The automotive industry, already grappling with competition from Chinese manufacturers in batteries and software, is particularly exposed. "The combination of high energy prices and global competition is creating a perfect storm for European industry," said a person familiar with the Commission's analysis.

Efforts to cushion the blow have been limited. While the EU has pursued energy affordability measures under the REPowerEU plan, outcomes depend on volatile energy prices and supply diversification. Without a robust policy response, analysts warn that job cuts could accelerate. "The situation is dire," one industry source noted. "Companies are delaying investments and restructuring workforces just to stay afloat."

The impact will vary by country, with Germany and other manufacturing-heavy economies likely hit hardest. The Commission is monitoring restructuring monitors across member states, but critics argue that more immediate action is needed. As one EU official put it, "We're in a race against time to protect jobs while transitioning to cleaner energy."

Correction: An earlier version of this article misstated the job loss figure as 1.3 million; the correct range is 1.0 to 1.3 million.