The war in Ukraine is increasingly burdening the European economy. This emerges from the spring forecast published by the European Commission this Monday in Brussels.
Russia's unprovoked invasion of Ukraine is causing untold suffering and destruction, said Economy Commissioner Paolo Gentiloni. Thanks to last year's strong economic recovery, the economy did not cool down too much this year. Nevertheless, the war is affecting the economies of the EU.
In its latest forecast, the commission corrected growth in the euro zone downwards from the initially expected four to 2.7 percent. At the same time, inflation expectations climbed from 3.5 to 6.1 percent.
Both private consumption and investment are likely to be negatively impacted by high inflation, uncertainty and worsening supply bottlenecks. But according to the Commission, growth will continue. Unless Russia stops supplying energy to the EU. If so, Europe could face a recession.
The Brussels forecast is accompanied by an analysis of possible scenarios that simulate the effects of higher energy commodity prices and a disruption in gas supplies from Russia, said Gentiloni. The latter is the unfavorable scenario. In both cases, the economy will shrink within a year.
Next week, the Commission wants to propose concrete recommendations for more budget flexibility to the member states in order to cope with the rougher economic climate.