Czech Business Today

The energy crisis, mainly triggered by Russia’s invasion of Ukraine, revealed and identified some of the substantial weaknesses and disruptions in the EU economic system which has to be structurally approved and adjusted so that it can face similar exogenous shocks more effectively, mainly in terms of resilience, efficiency and strategic autonomy. The impact of the energy crisis has been damaging in many aspects. These days, the EESC is analysing the cause and impact of the energy crisis on the European economy and is drafting recommendations for EU policy-makers how to ensure sustainable growth.

In 2022, the energy crisis directly contributed to the all-time inflation high in the recent history of EU integration, with average EU inflation at 9.2%, which is expected to fall to 6.4% in 2023 and 2.8% a year later. The high inflation had been the most visible phenomenon in the 2022 economic performance, with a knock-on effect on other elements of the consumer basket, and a strong impact on consumption and consumer behaviour. This has had an enormous impact on households and businesses. The very high level of bankruptcy declarations in the EU also shows the seriousness of the situation.

The energy crisis has impacted the economy in terms of high inflation, weak economic growth, strong pressure on public finances and a loss of external economic competitiveness. Europe should do its best to move beyond emergency fiscal responses and focus on structural changes to allow it to decouple from fossil fuels more quickly. For its smooth and competitive economic development, the EU needs reliable and secure deliveries of affordable energy based on an integrated energy market with a high share of clean energy, which is resilient and able to face disruptions and shocks. All policy steps should lead to inflation reduction over the course of this year and support economic recovery based on investments in the green, digital and strategically important sectors and industries, supporting the EU industrial base and global competitiveness, while using all advantages of the single market. All future interventions should be tailored, targeted and transition-proof.

Adding to the impact of the energy crisis were the previous negative consequences of the COVID-19 pandemic, which strongly weakened the EU’s economic performance after the biggest drop in GDP growth decline for many decades. Some sectors might suffer more from this cumulative effect. It also makes difficult to have an accurate overall picture of the impact of the energy crisis on the economy, as some effects still stem from the COVID-19 pandemic. The fact that today’s statistical data in some areas such as employment are rather positive, certainly does not mean that the situation is perfect. Concrete analysis of the impact on the economy can only be carried out when the crisis is over and when all detailed data are available.

Alena Mastantuono, Member of Employers´ group, rapporteur for the opinion on the impact of the energy crisis on the European economy

Alena Mastantuono