![]() ![]() ![]() Inflation triggered by the war could reduce real private consumption in the European Union by 1.1%, although the impact will vary across countries. Increased risk of poverty: households will be hit differently across and within countries In response, we need to implement clear policies to protect firms and ensure that public investment is fully used to catalyse private investment,” said EIB Chief Economist Debora Revoltella whose team authored the report. Our models show that in one year, the proportion of firms at the risk of default rises from 10% to 17%. “Inflation and higher energy prices pose a new risk to EU firms already weakened by the pandemic. The EIB Group stands ready to extend long-term financing at favourable rates to shelter a green and sustainable recovery and support inclusive growth.” “Maintaining good public policy coordination will be crucial to managing the economic impact of the war and will send a clear signal to markets, reducing uncertainty and tempering the risks of a new recession. Heightened uncertainty and higher food, commodity and energy prices are impacting investment and sustainable and inclusive economic development,” said EIB VicePresident Ricardo Mourinho Félix. The EU economy’s recovery from the COVID-19 impact was still firming up when the war broke out. The new report analyses the economic shock caused by the war, and the ensuing fallout for households, firms, banks and governments. These are some of the main findings of a new report titled How bad is the Ukraine war for the European recovery? published today by the EIB. A recession could happen, and further trade disruptions or increased economic sanctions would increase the risk for the European economy. Real economic growth in the European Union is now expected to fall below 3% in 2022, down from the 4% estimated by the European Commission before the war. At the same time, the European Investment Bank’s (EIB’s) economic models show that rising inflation could push more Europeans under the poverty line. Higher energy prices and trade disruptions could destabilise EU firms already weakened by the pandemic. The war in Ukraine risks upending Europe’s economic recovery. ![]() Public policies can help reduce risks for vulnerable households and firms to keep poverty and closures at bay.The slowdown in growth is particularly pronounced in countries in close proximity to Ukraine, but other EU countries are feeling the pressure as well.Trade disruptions and inflation are weighing on firms and households, threatening to derail Europe’s recovery and push many citizens into poverty. ![]()
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