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EU predicts recession to hit by winter amid soaring energy prices

Friday, 11 November 2022 11:26 AM [ Last Update: Friday, 11 November 2022 11:45 AM ]

The European Commission's autumn forecast predicts falling economic output in the last three months of this year and the first months of 2023. (AP file photo)

The European Union has warned that the eurozone is set to slide into recession over the winter with Brussels hiking inflation forecasts for 2022 and 2023 amid soaring energy prices.

Europe has been struggling for months with severe economic shockwaves from the Ukraine war that has fueled a spike in energy prices and hit the wallets of consumers around the continent.

The European Union's executive arm on Friday said the eurozone and many EU member states "are expected" to slip into recession in the final quarter of the year as inflation continues to soar and high fuel and heating costs hit consumer purchasing power.

The European Commission's autumn forecast released Friday predicts falling economic output in the last three months of this year and the first months of 2023.

It says high energy prices, a rising cost of living, higher interest rates and overall uncertainty "are expected to tip the EU, the euro area and most member states into recession in the last quarter of the year."

The European Commission announced that it is likely that the decline in economic activity will continue in the first quarter of 2023, so growth may return to the continent in the spring of next year.

With strong headwinds dampening demand, economic activity will slow and GDP growth will slow to 0.3 percent in 2023.

ECB interest rates hike sparks fear of deep recession in eurozone

As energy sanctions against Russia continue to backfire, some economists warn the EU could be heading for a deep recession.

This forecast was made while the commission has greatly increased its forecasts for inflation this year and the next year.

Eurozone inflation is expected to reach 8.5 percent in 2022, one point higher than previously forecast, and 6.1 percent in 2023, two points higher than previously said.

EU Economic Commissioner Paolo Gentiloni said inflation is rising more than expected but is nearing a peak and is likely to peak at the end of this year.

Critics say the EU's move to cut out Russia's cheap gas, over the war in Ukraine, is backfiring. Despite this, a 9th round of sanctions against Moscow is being prepared.

'Peace' seems to be a dirty word in Western capitals. This, as the US weapons and energy sectors make enormous profits while ordinary EU citizens pay a very high price.

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