The economic effects of Russia’s incursion into Ukraine have been felt across the continent, but the crisis has been especially acute in the UK. Interest rates have increased and the IMF downgraded growth forecasts for the eurozone’s big four economies. Inflation has reached above 10% for the first time in 40 years. In the UK, the Bank of England has predicted that inflation will rise to 13% in autumn. This will mean that the economy will likely enter a prolonged recession.
European economy entered the crisis in a reasonably strong position
In contrast to many other parts of the world, the European economy entered the crisis in a relatively strong position. Although the crisis has hit all of Europe, the US, Russia, and China are not immune. Rather than relying on these countries, the Europeans need to build up their own resilience, both at national and EU levels.
A severe recession in Europe could cause global economic harm and could even spark a global financial crisis similar to that which began in the US in 2007. The European economy is roughly equal to that of the US, and its economy is much more globally interdependent. Because of this, the likelihood of a European crisis is high.
While the situation is still far from perfect, there are signs of improvement. While the trust in EU institutions and other member states is low, more people in some EU countries believe that they can rely on the EU’s support. Moreover, a growing number of citizens believe that Germany will provide the needed support.
The European Council on Foreign Relations commissioned a survey of public opinion in 12 EU countries. This study was conducted by the firms Datapraxis, YouGov, Dynata, Alpha, and AnalitiQs. The results were reported in a report published on July 21, 2019.
Russia-Ukraine war has fundamentally transformed the global economy
The Russia-Ukraine war has changed the global economic landscape in a number of ways. For starters, the conflict has disrupted supply chains and thrown financial markets into turmoil. Furthermore, sanctions imposed on Russia and Ukraine have caused the price of many key commodities to rise, including food and fuel.
Additionally, the conflict has impacted the environment, causing damage to water supplies and natural resources. In some areas, water supply was disrupted for up to three weeks. During this time, neighboring regions provided water to Ukraine residents. In some areas, heavy metals and toxins have contaminated water supplies, creating a number of health risks. Further, the war in Ukraine has increased the amount of waste. As a result, uncollected household waste and military equipment are filling landfills.
Meanwhile, the war in Ukraine has also boosted global inflation. Moreover, oil prices are one of the main transmission channels of economic activity. The decline in Russian oil production through 2023 is expected to lower global oil prices, which will push up natural gas prices in Asia and Europe. As a result, global consumer price inflation is expected to pick up from 3.9% in 2021 to 6.4% in 2022.
The Russian ruble has fallen by 40 percent against the dollar in the past month. This has rendered the ruble completely useless outside Russia. In response, the Kremlin has banned the exchange of the ruble for hard currencies. The result is that the Russian people are unable to buy the products they used to buy. The resulting fall in living standards could make it difficult for Putin to remain in power.
Aside from a decrease in the demand in Russia, CEE exports are also hurting. Following the sanctions and countersanctions imposed by the EU last year, a number of CEE countries will experience a decline in their exports to Russia. In addition, the share of exports to EU member states has decreased, and exports to the rest of the world have increased.
EU ban on Russian oil imports could trigger a retaliatory move
The EU’s decision to impose a ban on Russian oil imports has been welcomed by European leaders, though it could spark retaliation by Russia if it causes a spike in prices. An embargo will also increase the pressure on Russia by reducing trade and the flow of money between Europe and Russia.
The ban on Russian oil imports could result in higher energy prices and a slowdown in the EU’s economy. Russia is the largest supplier of energy to the EU, which could face a spike in prices and fuel shortages if it stops selling its oil to the EU. The EU’s ban on Russian oil imports may also result in higher prices for alternative sources of energy.
While the EU ban on Russian oil imports has been welcomed by some lawmakers, it does not have unanimous support. Slovakia and Hungary are particularly reliant on Russian oil supplies and have requested an exception. The ban on Russian oil imports is subject to approval by all 27 EU members before it can be implemented.
While the EU ban on Russian oil imports could lead to a retaliatory move from Russia, other countries such as Bulgaria and Croatia can continue to import Russian oil. However, this move could cause further disruption in global crude flows and increase freight costs. Furthermore, it could also create parallels in the natural gas market.
The EU’s decision to impose sanctions on Russia is already impacting the global economy. It will especially impact the economies of poorer countries, which cannot absorb the shocks of higher oil prices.
Unemployment rate is higher in europe
Although the unemployment rate is still low in Europe, economists predict that it will rise to double-digits in the next few months. This is because of the expiration of the wage support schemes and the resurgence of infections, which are likely to make it difficult for companies to keep employees. This will increase layoffs and the unemployed rate.
The overall unemployment rate in Europe fluctuated between the first quarter of 2013 and the first quarter of 2018, and it rose and fell in almost all countries. During the first recession, unemployment increased while output declined. In the second recession, unemployment stayed high while output stagnated. The two years between recessions saw a decline in unemployment, although it remained elevated in some countries.
Although unemployment in the European Union is at its lowest level since the beginning of the financial crisis, it remains a problem in several EU countries. A growing proportion of people in these countries are part-time, self-employed, or temporary workers. A Pew Research Center analysis found that people in EU nations with higher rates of unemployment also express more pessimism about their job prospects.
Despite the fact that Europe’s unemployment rate is still higher than that of the United States, it is important to note that the EU and the United States have responded to the COVID pandemic in different ways. Understanding these differences is crucial for assessing the long-term impact of the crisis on the transatlantic economy.
The economic crisis has harmed the labour markets in the region, particularly for youth. While wage subsidies have slowed the decline in unemployment, youth unemployment is still significantly higher than the OECD average. As a result, the region is facing a large brain drain. In addition, the gender gap is a significant obstacle to women’s access to economic opportunities. Women make up 40% of the population in Western Europe, but only occupy 14.2 percent of senior management positions in companies.
France’s nuclear energy sector is better insulated
France’s decision to build a nuclear power plant is an interesting one, given the energy crisis facing Europe. It comes at the perfect time, when energy prices have skyrocketed and supplies of natural gas are scarce. In the past few months, natural-gas prices have increased by more than 400 percent. German factories are reporting huge production costs and the British steel industry has warned that electricity prices are rising so fast that they could force plants to close. Unlike in many other countries, France is better insulated from energy shocks.
The nuclear fleet in France is designed to load-follow. This means that the nuclear units can only produce electricity at certain times. However, a coordinated system of nuclear plants can handle peaks in the electricity market. While individual units cannot load-follow, new nuclear plants are designed to do so.
France is one of the largest net exporters of electricity in Europe. It also has the most reprocessing capacity for spent fuel in Europe. It produces 17% of its electricity using recycled fuel. As of end-of-2019, it has 136 GWe of installed nuclear capacity.
France is undergoing a national debate on how to transition to a greener energy future. Although the economic advantages of nuclear power outweigh the risks, the country has other options, including non-nuclear technologies. The government is under pressure to find a compromise. The government is divided between Green and Conservative parties, and has little room to maneuver.
In February 2011, the CPN set up a Nuclear Sector Strategy Committee, which comprises representatives of 80 companies and industry organisations. The Committee is headed by EdF and represents the French state’s determination to regain a dominant role in the nuclear sector. In addition to this, the company is part of the Gifen trade association. Until recently, the French state had created AFNI under the CEA to give international support to nuclear power projects. In 2019, the CEA disbanded AFNI, which was supposed to give international assistance.
