Cutting off Russian gas to the EU is likely to cost Germany €220 billion ($321.5 billion) in lost output and trigger a recession across the Continent, as experts warn about the bloc’s dependency on the Kremlin for energy.
Think tanks advising the German government said its economy would take a 6.5 per cent hit from the loss of Russian gas, while Moody’s warned of energy rationing in countries reliant on Russia for supplies.
The EU is reliant on Russia for about 40 per cent of its gas.Credit:Bloomberg photo by Andrey Rudakov
Overall, Europe imports about 40 per cent of its gas from Russia and about 25 per cent of its oil, meaning it is providing the Kremlin with a vital source of cash as Vladimir Putin continues his attack on Ukraine.
The EU has set out plans to end imports of Russian coal but has so far failed to reach agreement on a full energy embargo.
Germany receives about one third of its gas from Russia and Christian Lindner, its finance minister, warned earlier this month that a ban “would inflict more damage on ourselves than on them”. In a report on Wednesday, economic think tanks said an immediate halt to Russian gas would trigger a “sharp recession” in Germany, with inflation partly caused by the war already acting as a brake on growth this year.
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Stefan Kooths, of the Kiel Institute for the World Economy, said: “The shock waves from the war in Ukraine are weighing on economic activity on both the supply side and the demand side.”
Separately, Moody’s warned the difficulties of replacing Russian energy supplies, particularly gas, would lead governments to prioritise households, hospitals and transport for supplies, forcing some manufacturers to curtail production or close.
“The cut in energy supplies from Russia would result in a sharp drop in consumer and business confidence, which, combined with Europe’s trade linkages (both within its borders and globally), would likely result in an economic recession in Europe and raise the risk of a global recession,” it added.
Europe’s gas conundrum: Cutting off Russia would trigger recession
Source: Philippines Alive
