The threat of recession is rising in Europe, a top EU official warned on Wednesday, as skyrocketing energy prices caused by Russia’s invasion of Ukraine punish the economy.
“Uncertainty remains exceptionally high and the risk of a recession is rising,” EU economics affairs commissioner Paolo Gentiloni told a conference at Bruegel, a think tank in Brussels.
“We may well be heading into one the most challenging winters in generations,” he added.
Gentiloni, a former Italian prime minister, said “a number of warning lights are flashing red” all while the “Russian war continues”.
“Energy prices have shattered new records, inflation has continued to climb and economic sentiment is deteriorating,” he said.
However, the economic picture was not all “doom and gloom”, Gentolini said, with employment in Europe still strong and supply chain problems stemming from the coronavirus pandemic beginning to get solved.
Crucially, Gentiloni said the European economy had outperformed expectations in the second quarter of 2022.
According to the latest data from the EU’s Eurostat agency, eurozone GDP grew by 0.7 percent in the first quarter and 0.8 percent in the second quarter.
The EU as a whole grew 0.8 percent in the first quarter and slowed only slightly to 0.7 percent in the following April to June period.
Faced with such challenges, Gentiloni urged EU countries to “intervene as needed in a spirit of solidarity” — a veiled reference to old battles that pitted richer nations against poorer and more vulnerable ones.
“If we remain united … we can ensure that the coming months will not be remembered as the winter of our discontent -– but as the harbinger of a new European spring,” he added.