“When the war began in the Middle East and energy prices soared, Europe braced for a sharp, short economic shock. More than three months later, the region is settling in for a period of higher prices and weaker growth that could last much longer than expected,” the New York Times reports.
“For Europe, the recovery from the last energy shock just a few years ago has been cut short in its early stages. The economic drag is now forecast to last into next year as higher energy costs drain money from public budgets, sapping investment for more productive uses. Consumers would be left increasingly nervous about spending.”
“Russia’s invasion of Ukraine in 2022 cut Europe off from a critical source of natural gas, and inflation raced into the double digits. Policymakers responded by aggressively raising interest rates to thwart price growth, but that also sharply restrained the economy.”
“The concern today is a more subtle, but still adverse, economic hit: noticeably higher inflation and interest rates into next year at least.”
