During his October 10 presentation at the SteelOrbis Fall 2022 Conference & 87th IREPAS Meeting held in Monaco, Daniel Gross, board member of the Centre for European Policy Studies (CEPS), said that the outlook for the European economy will continue to be impacted by the war in Ukraine.
Although it is difficult to discern any potential compromise after the annexation of four Ukrainian provinces by Russia, he said, there is no overwhelming advantage for either country, which means that the months-long conflict is becoming a war of means, while notably Ukraine appears to have the upper hand when it comes to global financial support.
“Russia has already played the natural gas card and can now only hope that high gas prices will undermine EU solidarity,” he said, adding that the effect of high natural gas prices in Europe has not been felt in the US, which has been the main provider of military and financial support to Ukraine.
In terms of how the ongoing war is impacting the EU, he pointed out that overall energy costs in Europe, and the ways in which they are impacting the cost of finished goods, are being shared across the European states.
“Given record gas and electricity prices, an industrial recession appears to be difficult to avoid in Europe, but the recent halving of gas and electricity prices make a recession less likely,” he said, adding that recessionary concerns are not limited to EU nations.
“China is also slowing down under the impact of ‘zero Covid’ policies and a diminishing return on investment, and, while the US is less impacted by higher energy prices, it has a fiscal hangover from the extraordinary stimulus support the government provided to the nation last year,” Gross continued. He went on to state, “High energy prices have been a shock for Europe, and, while it’s differentiated across countries, it should be manageable provided that winter is mailed and provided that spot prices do not spike again.”
He said he also feels the war in Ukraine will get worse before it gets any better, and that the rebound of the European economy has been stopped by high energy prices. He also stated that he believes that any recession due to these factors should be confined to industry, and that it should be temporary.