Forex
Europe’s energy crisis: Europe spent 280 billion euros on mitigation in a year – Bruegel
Since September 2021, European governments have spent a total of €280 billion on alleviating Europe’s energy crisis, according to estimates by think tank Bruegel.
This amount includes all European governments’ expenditures to cover the burden of the crisis on regional businesses and citizens, including subsidizing small business rates in Greece and direct payments in Belgium. Some of the allocated funds have not yet been realized.
“Prices (for energy – IF) will be high throughout the winter, and European countries must work with a worst-case scenario in which prices remain so even after that,” said Bruegel analyst Giovanni Sgaravatti. – Governments need to focus on ways to reduce demand in sectors where this is possible.
What is causing Europe’s energy crisis?
Energy prices on the continent have jumped more than 10 times their seasonal averages over the past five years as Russian gas supplies declined. This factor is negatively affecting economic growth in the region, putting heavy industry in difficulty. At the same time, ordinary citizens face a sharp rise in the cost of consumer goods and services.
Among European countries, Germany allocated the most funds to support the population in the conditions of the energy crisis – 60.2 billion euros, or 1.7% of the country’s GDP. Italy spent €49.5 billion (2.8% of GDP); France – €44.7 billion (1.8%); Great Britain – €44.3 billion (1.6%) and Spain – €27.3 billion (2.3%).
“European policymakers have responded to the spike in energy costs with wide-ranging price-cutting measures involving subsidies, tax cuts and price controls,” the IMF experts said in their monthly report, adding that such measures have led to a disregard for the need to act on energy savings. “As a result, global energy demand and prices have been higher than they could have been,” the report said.
Earlier we reported that business activity in the euro area fell for the second consecutive month in August.
U.S. stock index futures are rising Thursday, trading data showed. Markets are assessing the outcome of the U.S. Federal Reserve (Fed) meeting.
The Dow Jones Industrial Average (DJIA) futures rose 0.22% to 32,329 points, the NASDAQ high-tech index rose 0.96% to 12,828.5 points and the S&P 500 broad market index rose 0.48% to 3,989.75 points.
The Fed on Wednesday expectedly raised its benchmark rate by 25 basis points to 4.75-5% per year. The regulator noted that it does not expect the rate reduction this year, but allows it next year. U.S. exchanges were down 1.6% in Wednesday trading.
According to the CME Group, 55.8% of analysts now expect the Fed’s discount rate to remain unchanged in May, while 44.2% expect it to rise another 25 basis points. Thus, markets concede that the Fed may interrupt the cycle of hikes that began last March.
At the same time, shares of cryptocurrency exchange Coinbase were down 10.6% in pre-bid trading. The exchange this week received notice from U.S. authorities of an impending charge of violating laws.
Later in the trading, statistics on initial jobless claims in the U.S. for the week through March 18 will be released. Analysts forecast that the figure would increase by 5 thousand to 197 thousand applications.
Earlier we reported that the US budget deficit was $262bn in February.
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According to a report from the U.S. Treasury Department, the U.S. budget deficit in February was $262,434 billion compared to a $38.8 billion deficit in January. The Dow 30 also had problems.
Analysts at DailyFX suggested that the nation’s budget deficit for February was expected to be $256 billion. A year earlier, in February, the U.S. posted a budget deficit of $216,590 billion.
According to the GAO report, U.S. government spending rose 3.5 percent year over year last month to $524.548 billion, while revenue, in contrast, declined 9.5 percent to $262,114 billion.
Earlier, the U.S. edition of the Washington Post published an editorial stating that the new draft budget proposed by the Biden administration undermines U.S. national security and its ability to invest in the future, because it suggests a further growth of the U.S. national debt.
The WP editorial board noted that the new draft budget assumes a $2 trillion budget deficit, including due to the high cost of providing health insurance to the elderly of the baby boomer generation.
Earlier we reported that the EU has agreed to reduce energy consumption by 11.7% by 2030.
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