Europe’s Energy Crisis Is Costing the EU and UK Governments $500 Billion
- Europe’s energy crisis is approaching €500 billion as countries scramble to protect citizens from harsh winters.
- EU governments are spending 314 billion euros, while Britain has allocated 178 billion euros, according to think tank Bruegel.
- Germany has allocated 100.2 billion euros, France 53.6 billion euros and Italy 59.2 billion euros.
The energy crisis is close to costing Europe 500 billion euros, or $496 billion, according to think tank Bruegel, a sign of pressure on governments to protect citizens from harsh winters.
The UK has so far set aside the equivalent of 178 billion euros for the energy crisis, and EU countries have set aside about 314 billion euros, Bruegel estimates. data Posted Wednesday.
Among the 27-nation group, Germany led the way 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 used in government efforts to protect households and businesses from sky-high energy prices, which have soared since Europe was choked by Russian gas supplies.
Netherlands TTF Natural Gas FuturesEuropean benchmark prices surged more than 400% when they peaked in 2022. Prices have since pared gains and are now up 220% at around €204 MWh for the front-month contract on Wednesday.
The UK has so far imposed a price cap on heating, while other countries such as Germany are launching massive bailouts and billions of dollars in aid to energy companies in hopes of supplying enough supplies to households this winter.
The measures, which some have criticized for weighing on fiscal spending, may be necessary to rein in euro zone inflation, experts warned, pointing to the 9.1 percent inflation reported in August.
Top economist Paul Krugman has said that burdening households with high prices is not a “real option” and could plunge the continent into a spiral of wage price inflation, which could have serious implications for Europe. will be more expensive.
But even with billions in government aid, the economic outlook remains grim. Analysts at BlackRock have previously warned that Europe will slip into a deep recession by early 2023, with the economy expected to contract by 0.9% by the end of the year.