Europe Insights - May 2022
Speeding up the energy transitionIn a nutshell:
The energy crisis is weakening economic prospects amid higher energy prices, supply and confidence risks. Consensus forecasts for 2022 eurozone GDP growth have been downgraded to 2.8 per cent, from 4.2 per cent in December1. As eurozone investment has just recovered from the pandemic crisis, diverging trends across countries need monitoring.
The Russia-Ukraine conflict has clearly strengthened policy cohesion to accelerate the green transition for energy security, and climate change. The European Union has set up a plan, REPower EU, and forged a transatlantic Energy Pact with the United States and other European countries, covering gas supplies, infrastructure development and technical cooperation. Within a comprehensive approach to supporting the green transition, these plans will probably result in short term pain for a long term gain.