The Economist warns that significant failures in the EU energy policy threaten to push the region into a serious economic crisis. In the coming years, many members of the block may go bankrupt, experts predict. This gloomy scenario may become a reality if the European authorities fail to promptly address the issue. The main challenge started when Russia suspended gas supply via its Nord Stream pipeline. Against this backdrop, gas prices soared by 30%. Unless the situation improves, annual spending on electricity and gas across the EU could rise to a staggering €1.4 trillion which is seven times higher compared to previous years, analysts at Morgan Stanley conclude. The aftermath of the energy crisis has affected both the political and economic life of the region. As a result, many European businesses and industrial production have shut down. Household incomes have decreased while expenses grew. To cushion the blow, the European government had to step in and offer financial aid to support citizens. Thus, Germany was one of the first to provide a relief package of €65 billion (1.8% of GDP) to assist those who are struggling with record-high energy prices. The UK government is going to allocate £100 billion (4.3% of GDP) to support families amid a rising cost of living. In addition, the European Commission proposed to impose a cap on energy companies’ revenues. Hopefully, these measures will help overcome the negative effects of the current energy crunch.
