Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

EU plans for life without Russian gas amid inflation spike

EU leaders on Friday warned that "cheap energy is gone" and agreed to boost preparations for further cuts in Russian gas, accusing Moscow of "weaponising" energy via a supply squeeze which Germany warned could partly shut its industry.

A day after celebrations over setting Kyiv on the road to membership of the bloc, Friday's summit in Brussels was a sober reflection on the economic impact of Russia's invasion of Ukraine, with growing worries over soaring prices and warnings of a "tough winter".

"Inflation is a major concern for all of us," European Council chief Charles Michel told a news conference as the two-day summit ended.

"Russia's war of aggression is pushing up the price of food, energy and commodities," he said, adding that leaders had agreed to closely coordinate their economic policy responses.

The summit agreed few concrete steps but the leaders tasked the European Commission with finding more ways to secure "supply at affordable prices" because of "the weaponisation of gas by Russia."

European Commission chief Ursula von der Leyen said the search for alternative supplies was already in progress, with U.S. LNG deliveries up 75% this year from last year, and Norway pipeline gas deliveries up 15%.

Besides, the EU executive will present a plan on preparedness for more gas cuts from Russia to leaders in July she said, adding: "Hope for the best, prepare for the worst. That's what we are doing right now."

The European Commission will come up with proposals and options to discuss at a next EU summit in October, including considering alternative market designs that would potentially include decoupling gas from the formation of the market price for electricity, von der Leyen said.

"We are working on different models, not only to look into how to curb the energy prices or electricity prices but also to look at the market design, with the question: is the market design we have today still fit for purpose?", she said.

One contentious issue is whether governments should step in to cap prices.

Spain and Portugal capped gas prices in their local electricity market this month, but other states warn price caps would disrupt energy markets and drain state coffers further, if governments had to pay the difference between the capped price and the price in international gas markets.

"TOUGH WINTER"


Leaders of the 27 EU nations placed the blame for a huge spike in prices and sagging global growth on the war that began exactly four months ago.

"The notion of cheap energy is gone and the notion of Russian energy is essentially gone and we are all in the process of securing alternate sources," Latvian Prime Minister Krisjanis Karins said, adding governments must "support those portions of society that suffer the most".

Following unprecedented Western sanctions imposed over the invasion, a dozen European countries have so far been thumped by cuts in gas flows from Russia.

"It is only a matter of time before the Russians close down all gas shipments," said one EU official ahead of Friday's talks.

German Economy Minister Robert Habeck warned his country was heading for a gas shortage if Russian supplies remained as low as now, and some industries would have to close come winter.

"Companies would have to stop production, lay off their workers, supply chains would collapse, people would go into debt to pay their heating bills," he told Der Spiegel magazine.

The EU relied on Russia for as much as 40% of its gas needs before the war - rising to 55% for Germany - leaving a huge gap to fill in an already tight global gas market.

Inflation in the 19 countries sharing the euro currency has shot to all-time highs above 8% and the EU's executive expects growth to dip to 2.7% this year.

Eurogroup chief Paschal Donohoe warned that the bloc must "acknowledge the risk we could face if inflation becomes embedded in our economies".

"If we don't pay attention then the whole EU economy will go into a recession with all its consequences," Belgian Prime Minister Alexander De Croo warning of a potential "tough winter" ahead.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Hungary Ranked Among the World’s Safest Travel Destinations for 2025
G7 Leaders Fail to Reach Consensus on Key Global Issues
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
Wreck of $17 Billion San José Galleon Identified Off Colombia After 300 Years
Man Convicted of Fraud After Booking Over 120 Free Flights Posing as Flight Attendant
Iran Launches Extensive Missile Attack on Israel Following Israeli Strikes on Nuclear Sites
Beata Thunberg Rebrands as Beata Ernman Amidst Sister's Activism Controversy
Hungarian Parliament Approves Citizenship Suspension Law
Prime Minister Orbán Criticizes EU's Ukraine Accession Plans
Hungarian Delicacies Introduced to Japanese Market
Hungary's Industrial Output Rises Amid Battery Sector Slump
President Sulyok Celebrates 15 Years of Hungarian Unity Efforts
Hungary's Szeleczki Shines at World Judo Championships
Visegrád Construction Trends Diverge as Hungary Lags
Hungary Hosts National Quantum Technology Workshop
Hungarian Animation Featured at Annecy Festival
Israel Issues Ultimatum to Iran Over Potential Retaliation and Nuclear Facilities
UK and EU Reach New Economic Agreement
Coinbase CEO Warns Bitcoin Could Supplant US Dollar Amid Mounting National Debt
Trump to Iran: Make a Deal — Sign or Die
Operation "Like a Lion": Israel Strikes Iran in Unprecedented Offensive
Israel Launches 'Operation Rising Lion' Targeting Iranian Nuclear and Military Sites
UK and EU Reach Agreement on Gibraltar's Schengen Integration
Israeli Finance Minister Imposes Banking Penalties on Palestinians
U.S. Inflation Rises to 2.4% in May Amid Trade Tensions
Trump's Policies Prompt Decline in Chinese Student Enrollment in U.S.
Global Oceans Near Record Temperatures as CO₂ Levels Climb
Trump Announces U.S.-China Trade Deal Covering Rare Earths
Smuggled U.S. Fuel Funds Mexican Cartels Amid Crackdown
Austrian School Shooting Leaves Nine Dead in Graz
Bezos's Lavish Venice Wedding Sparks Local Protests
Europe Prepares for Historic Lunar Rover Landing
Italian Parents Seek Therapy Amid Lengthy School Holidays
British Fishing Vessel Seized by France Fined €30,000
Dutch Government Collapses Amid Migration Policy Dispute
UK Commits to 3.5% GDP Defence Spending Under NATO Pressure
Germany Moves to Expedite Migrant Deportations
US Urges UK to Raise Defence Spending to 5% of GDP
Israeli Forces Intercept Gaza-Bound Aid Vessel Carrying Greta Thunberg
IMF Warns of Severe Global Trade War Impacts on Emerging Markets
Low Turnout Jeopardizes Italy's Citizenship Reform Referendum
Transatlantic Interest Rate Divergence Widens as Trump Pressures Powell
EU Lawmaker Calls for Broader Exemptions in Supply Chain Legislation
France's Defense Spending Plans Threatened by High National Debt
European Small-Cap Stocks Outperform U.S. Rivals Amid Growth Revival
Switzerland Proposes $26 Billion Capital Increase for UBS
×