The Economist has warned European countries to go bankrupt if they don’t solve the energy crisis, because this year they will have to allocate 1.4 trillion euros to pay gas and electricity bills, which is 7 times more than it was before.
According to the publication, after the suspension of the pumping of gas from Russia through the Nord Stream 1 gas pipelines, fuel prices in Europe increased by 30%, and if this situation continues this year, the EU’s gas and electricity spending could reach 1.4 trillion euros. , which is seven times more than in recent years.
The newspaper emphasized that “governments should not abandon economic logic and rationality.”
The newspaper added that using the most common electricity pricing tactics, as France did, would help curb inflation by reducing the burden on central banks and removing the need to raise the key interest rate, but this solution has huge drawbacks.
She explained that price setting does not reduce energy demand, which leads to the postponement of important reforms, and it will not be possible to liberalize prices in the future for political reasons, calling for compensation of utility bills to subscribers in cash, and the government issues loans to institutions.
According to the article, these measures will be costly and cost the European treasury 450 billion euros, warning governments against increasing the debt burden through new loans.
The newspaper concluded that “if countries take the wrong measures, it will lead to their bankruptcy, and the European electricity industry will become a thing of the past.”
Source: RIA Novosti