Europe’s Energy Crisis Is Costing the EU and UK Governments $500 Billion
- Europe’s energy crisis is close to costing 500 billion euros, as countries scramble to protect citizens from harsh winters.
- According to think tank Bruegel, EU governments are allocating 314 billion euros, while the UK has earmarked 178 billion euros.
- Germany allocated 100.2 billion euros, France 53.6 billion euros and Italy 59.2 billion euros.
According to think tank Bruegel, the energy crisis is costing Europe close to 500 billion euros, or $496 billion, a sign that governments are scrambling to protect citizens from harsh winters.
Bruegel estimates that the UK has so far allocated the equivalent of 178 billion euros to the energy crisis, and EU countries have allocated around 314 billion euros. Information Published on Wednesday.
Among the 27-nation bloc, Germany leads the pack with 100.2 billion euros allocated for the energy crisis, followed by France and Italy with 53.6 billion euros and 59.2 billion euros respectively.
Those costs are largely government efforts to protect households and businesses from sky-high energy prices, which have risen since Europe cut off Russian gas supplies.
Dutch TTF Gas FuturesEuropean benchmarks, up more than 400% to their peak in 2022. Prices have since recovered less and are now up 220%, with forward-month contracts at around €204 per MWh on Wednesday.
Until now, the UK has implemented a price cap on heating, and other countries such as Germany are launching large-scale bailouts and allocating billions in aid to energy companies in the hope of being able to secure enough supplies for households this winter.
Some have criticized the moves for putting pressure on fiscal spending, but they may be necessary to keep eurozone inflation under control, experts warn, pointing to the 9.1% inflation rate reported in August.
Top economist Paul Krugman said letting households bear the burden of higher prices was “not really an option” and could send the continent into a wage-price inflation spiral, which would be more expensive for Europe to correct.
But despite billions in government aid, the economic outlook remains grim. BlackRock analysts previously warned that Europe would push itself into a severe recession by early 2023, with a downbeat view of a 0.9% contraction of the economy by the end of the year.