As energy prices skyrocket and economic growth falters, pro-European governments are bracing for a crisis they seemingly have no power to stop. This shock could seriously shake the already weakened political "mainstream" within the bloc.

Across Europe, unpopular ruling establishments are facing populist backlash. According to Politico, discontent could strike so hard that it might bring victory to the far-right National Rally in France next year and install the extreme right in the ร‰lysรฉe Palace, sending shockwaves around the world.

"Energy costs are spilling over into food, transport, and housing, hitting lower- and middle-income households the hardest," Seamus Boland, president of the European Economic and Social Committee, told Politico. "Politically, this creates room for distrust, not only toward national governments but also toward the ability of European institutions to protect citizens. It risks accelerating support for protectionist policies."

France as the main prize, but not the only target

Although France is the biggest "prize" for populists, it is not the only sign that Europe's political center is unraveling.

In Bulgaria, the victory of Kremlin-friendly former President Rumen Radev on April 20 has rattled ruling establishments across Europe. In Romania, a coalition crisis could soon topple pro-European Prime Minister Ilie Bolojan, while in Germany, the far-right Alternative for Germany (AfD) is eyeing gains in September's state elections in Saxony-Anhalt, having already penetrated parts of western Germany.

The Iran conflict will be in focus on Monday when deputy finance ministers from the EU's 27 member states meet in Athens to discuss mitigating economic fallout without pushing the bloc into a debt crisis. Their bosses will continue the debate next week in Brussels.

Alarm bells and the threat of "stagflation"

When European leaders held a two-day summit in Cyprus last week, as economic experts gathered in Greece, one topic dominated both private conversations and public statements: Europe's economy is already weak, and the Iran shock threatens to make it politically explosive.

The Strait of Hormuz remains closed to most commercial maritime traffic, keeping oil prices above $100 per barrel. The U.S.- and Israel-led attacks are the latest and most acute trigger for an economic red alert in Europe.

European Economy Commissioner Valdis Dombrovskis warned Politico that Europe faces "stagflation"โ€”economic slowdown coupled with rising inflation. As a result, the EU is expected to have to revise its economic forecasts downward in the second half of May. Germany and Italy, which together account for more than a third of the EU's total GDP, have already done so.

Macron's warning: Time to wake up

Former European Central Bank (ECB) President Mario Draghi previously warned that Europe faces a "slow agony" unless it undertakes deep reforms to catch up with fast-growing China and the U.S.

"We should not underestimate the fact that this is a unique moment where the American, Russian, and Chinese presidents are all turning against Europeans," French President Emmanuel Macron said during a visit to Athens. "So, it's the right time to wake up."

Economic gloom is also reopening one of the EU's oldest fault lines: the conflict between "frugal" northern countries and southern states seeking more support from Brussels. EU budget negotiations have become a real battlefield. While the North wants to curb spending and redirect money to defense, the South seeks economic support.

Another bill looms over the negotiations: from 2028, the EU is set to start repaying โ‚ฌ25 billion annually in common debt issued to combat the consequences of the Covid-19 pandemic.

"We borrowed during Covid. Today, some tell us we have to pay it back quickly," Macron concluded on Friday, calling such demands "idiotic."