Eurozone faces power price shock: press
Wholesale prices for natural gas have quadrupled in a year and along with rising fuel prices are threatening post-coronavirus economic recovery, Reuters reported on January 18.
In December last year, the European Central Bank predicted that the euro-zone economy would expand by 4.2% in 2022, driven by a 5.9% surge in private consumption.
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Dramatically higher natural gas costs are hitting homes and businesses hard. Energy usually accounts for just over 6% of private consumption in the eurozone but this could rise to 8-10% as a result of higher prices, according to ING's estimates.
"This would also be in line with previous episodes of higher energy prices, in which almost all countries saw other expenditures dropping," ING economist Carsten Brzeski said.
Some countries have seen a 54% increase in energy bills from 2020, according to BofA.
The result would be a negative supply shock affecting most European countries except France where electricity price increases have been capped at 4%.