Experts estimate €1 billion needed to beat EU energy crisis

“The fight against the energy crisis could require the European Union to spend $1 billion”, experts told the Russian news agency RBK.

This forecast was given by former McKinsey Consultants of the Moscow branch, operating today under the name ‘Yakov i Partnyeri’ (Yakov and Partners) after the departure of western corporations from Russia. The EU-wide budget deficit could increase up to €2 trillion, equalling 11,5-16,2% of current GDP.

The research by ‘Yakov i Partnyeri’ states that as a consequence of the restrictions on Russian gas imports to the EU and a rise in prices on other sources of energy, the union had to reduce output levels in several industries: nitrogen fertilizers by 70%, aluminum smeltings by 25%, and steel production by 5%.

The consultants forecast that with the accumulated effect of reductions to output levels, increases in energy imports, and other factors, the overall EU GDP for 2022 could decrease by more than 1% (€200 billion) and in 2023 by even up to 11,5% (€1,7 trillion). They estimate that the necessary spending needed to offset the effects of such a drop in GDP surpasses €2 trillion.

“Measurements such as paying out compensations due to increased gas prices to businesses and households, severance packages for employees whose productions have stopped, investments towards a decrease in energy dependence, and others could cost the EU up to €1,6 trillion in 2023”, the RBK quotes a partner at the consultancy firm, Elena Kuznetsova.