Europe suffers from drought, gas cuts and energy shortages – 23/08/2022

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Europe is currently going through the most delicate moment in its recent history. An unprecedented drought has sparked fires and damaged European crops this summer, as Russia announced a new cut in natural gas supplies to the western part of the continent. This all takes place in the midst of the most serious inflationary crisis of the century and contributes to an even more expressive increase in food and energy prices in the region.

While the United States and Brazil have presented data that indicate a strong deceleration of inflation, the situation in Europe is quite different. In the eurozone, 12-month inflation accelerated to 8.9% in July, while the rate reached 10.1% in the UK over the same period.

With energy on the rise, the harvest weaker and winter approaching, the trend is for an even greater rise in the region’s price indices in the coming months, if the current scenario holds up.

This context reinforces the bets on a European recession, as large cities in countries like Germany and France begin to impose limits on the use of electricity in commercial establishments.

In this way, we may be facing a new series of restrictions on the functioning of trade and the service sector on the continent, not as a result of the coronavirus pandemic, but due to the lack of electricity in most European nations.

Read on ‘Investigating the Market’ (subscribers only) UOLwhich have full access to the content of UOL Investimentos): information on the prospects for the civil construction sector in Brazil.

A hug,

Rafael Bevilacqua
Levante’s Chief Strategist and Founding Partner

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