The Economics Of Russia Cutting Off Gas Supplies To Europe

14th August 2022

Bog by by Tejvan Pettinger.
If Russia were to cut off gas supplies to Europe this winter. What would happen? Households may face record bills, but industry will probably get by as already demand is being reduced.

The EU relies heavily on Russia for the import of natural gas - around 40% of all natural gas at the start of 2022. Since June 2021, there has been a 60% cut in Russian gas, and this has caused considerable distress in the form of higher prices, inflation, lower economic growth and potentially devastating household bills. Despite the rise in imports of LNG from the US and elsewhere, can Europe cope and will it cause a recession?

Cost of living crisis A big difference between UK and France is that France has limited price increases and the government is being sued by energy companies for forcing them to sell energy at a loss. The UK is allowing market forces to dictate prices, as prices could rise to as high as £4,000 a year (even £5,000 is now being quoted) for the average household by Jan 2022 (up from £1,000 at the start of 2021) For many households already struggling with a cost of living crisis, it is a real challenge.

Read the full blog HERE

Reuters
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