The eurozone is fighting “fires on all fronts”, says Mehreen Khan in The Times. Squabbling in Italy’s governing coalition has left the bloc’s third-biggest economy heading for “a summer of political paralysis”, with the future of prime minister Mario Draghi in doubt.
European governments have begun to work under the assumption that Russian energy will be cut off entirely this year, say Ewa Krukowska and John Ainger on Bloomberg. The European Commission is reportedly preparing a plan for “a voluntary 15% cut in natural gas use by member states starting next month” to conserve stocks for winter. The Commission thinks a Russian gas cut-off and a harsh winter could wipe 1.5% off EU GDP.
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Germany has reduced its dependence on Russian gas from 55% to 35% since the invasion of Ukraine, says Philip Oltermann in The Guardian, but that still leaves it heavily exposed to Putin’s whims. For now, politicians hope to spare households from rationing while imposing restrictions on industry, which accounts for roughly one-third of gas use. Yet the chemical and pharmaceutical industries are warning of unintended “domino effects” from more supply-chain disruption.
“The good news is that the EU’s tanks are now almost 60% full”, more than this time last year, Leslie Palti-Guzman of data firm Leviaton told The Economist. Europe has also become a major importer of liquefied natural gas (LNG), with imports up 70% year on year in the first quarter. “To the chagrin of greens” European governments are also granting waivers for “filthy coal” plants to “crank out more power”.
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Eurozone inflation hits 10.7% in OctoberNews Inflation across the eurozone hit 10.7% in October. What does it mean for your money?
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Why complacent Germany needs to get a gripBriefings The gas-supply crisis is merely the most conspicuous sign of the complacency and drift besetting Europe’s largest economy. Germany’s national business model needs an overhaul.
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The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
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Is the eurozone heading for another crisis?Analysis The eurozone avoided breakup when Greece couldn’t repay its debts after the 2008 financial crisis. Now it’s in trouble again, says John Stepek. And this time the focus is on Italy – a much bigger economy than Greece.
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A new headache for the ECBNews Italy, the eurozone’s third-largest economy, has debt of €2.759trn – almost 150% of GDP. A crisis there would pose an existential risk to the euro.
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ECB set to raise interest rates as stagflation beckonsNews With inflation at 8.1% and economic growth at just 0.3%, the eurozone is on the brink of stagflation. To combat it the European Central Bank is to stop buying bonds immediately and could raise interest rates next month.
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Allianz's $6bn scandal exposes Germany's cosy corruptionAnalysis Allianz’s $6bn scandal is just the latest example of wrongdoing by a major German company.
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Why France's soaring debt is a real risk no matter who is presidentOpinion The result of France's presidential election matters less than the state of its public finances, says Matthew Lynn
