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 Europe reels at energy costs (1) infographic
Graphic shows souring natural gas costs and euro-zone GDP.


Europe reels at energy costs

By Duncan Mil

March 11, 2022 - Europe’s economy is facing a €550 billion surge in the cost of energy imports if prices stay at current levels as the EU relies on Ukraine for gas, oil and over half its supply of corn.

Since Russia began Europe’s most significant conflict since World War II, business enterprises across the continent are in varying stages of despair at the consequences on livelihoods. The crisis is affecting prosperity from the farmlands of Spain to the euro zone’s manufacturing core in Germany and France.

The root of the difficulties is surging energy costs and the European Union’s reliance on Ukraine for over half its supply of corn, a key source of feed for pigs. Analysts are slashing outlooks for crop exports by as much as a third, sending prices soaring.

The price of natural gas in Europe hit an all-time high on March 7, briefly touching €345 per megawatt-hour (MWh). In the first half of 2021, the price had stayed roughly in the range of €15-30 per MWh.

In a report published by investment bank JPMorgan on Wednesday (March 9, 2022), London-based economist Greg Fuzesi calculated that a €550 billion income shock equals 4.5 per cent of the eurozone’s estimated €12.2 trillion output in 2022.

“In general, it is easier for policy makers to provide support when gas is still flowing, even if this involves a large fiscal cost,” Fuzesi told Bloomberg.

PUBLISHED: 11/03/2022; STORY: Graphic News