Nearly 90 per cent of investors globally now expect Europe to fall into recession as the possibility of Moscow cutting off the continent from Russian gas becomes more likely.
Nearly nine in ten global investors are reportedly expecting the economies of Europe to go belly-up within the next twelve months, research reportedly conducted by Bank of America has found.
Already suffering the after-effects of draconian COVID-19 lockdowns, the continent is now bracing to lose its access to Russian gas supplies as a result of Western sanctions, a penalty that — if imposed by Russia — the International Monetary Fund (IMF) expects will see the GDP of some nations contract by up to six per cent.
According to the Bank of America data seen by the Irish Times, around 86 per cent of global investors think that Europe will fall into a recession, a figure that is up from 54 per cent last month.
Meanwhile, the IMF has voiced concern as to the devastating effects a potential Russian shut-off of gas supplies would have on Europe, with Hungary, Czechia and Slovakia being outlined as the nations most at risk, while Austria and gas addict Germany were also highlighted as being in danger.
“Our work shows that in some of the most-affected countries in central and eastern Europe, there is a risk of shortages of as much as 40 per cent of gas consumption and of gross domestic product shrinking by up to 6 per cent,” a blog post by the organisation read, though noted that the continent’s exposure could nevertheless be mitigated with the use of liquified natural gas (LNG).
“Governments must boost efforts to secure supplies from global LNG markets and alternative sources, continue to alleviate infrastructure bottlenecks to import and distribute gas, plan to share supplies in an emergency across the EU, act decisively to encourage energy savings while protecting vulnerable households, and prepare smart gas rationing programs,” it went on to read.
Having come under fire for its invasion of Ukraine, Vladimir Putin’s Kremlin has seemingly used Russia’s massively relied upon energy section as a bludgeon to retaliate against sanctions imposed upon it by the west.
In particular, Moscow has either partially or fully pulled the supply of gas from a number of different EU countries, with the Russian state gas company now telling its European customers that it can no longer guarantee the continued supply of gas to countries on the continent.
As a result, the EU has been frantically preparing for a potential complete loss of gas, with it being reported on Tuesday that Brussels could force its member states to start rationing gas in the event that Putin does cut off supply.
Such a plan, according to a report by POLITICO, would be implemented in such a way as to bypass the European parliament, while also preventing individual EU nation states from vetoing it, leaving many national governments at the mercy of EU oligarchs.
The fine details of the proposal are due to be both announced and debated on Wednesday.
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