Present a year after the beginning of the Russian invasion of Ukraine, beyond the turn taken by the fighting, another issue weighs on the outcome of the conflict: that of the resilience of the European economy in the face of to the consequences of the war. The capacity to absorb this shock depends on two things: the solidity of the support which the Twenty-Seven bring to kyiv and the acceptability of the efforts which are asked of their citizens. However, in recent weeks, the gloomy outlook for the European economy has begun to dissipate.
Germany is now expecting slight growth in the first quarter, whereas a few weeks ago most economists were betting on a recession. Inflation is calming down, supply difficulties are being reduced, and industry has been able to adapt to the energy crisis. The “shield” of 200 billion euros brandished by the government of Olaf Scholz to protect German companies now seems largely oversized.
After a delicate phase of soaring gas prices, dragging in its wake that of electricity prices, Europe was able to wean itself off Russian fossil fuels in record time. The mild winter, the effectiveness of restraint measures and the diversification of supplies helped to calm speculation and ward off the threat of shortages. At the start of 2023, the prices of natural gas and electricity are even lower than those observed just before the outbreak of the conflict.
Unemployment at its lowest
Employment is also holding up. The euro zone has three million more jobs than before the Covid-19 pandemic, and unemployment is at an all-time low. France is no exception. Despite the slowdown in growth, business bankruptcies remain contained, and the unemployment rate, down 10% over the whole of 2022, has returned to its 2011 level. softer, but there will be neither a decline in GDP nor an explosion in unemployment, even if the purchasing power of the French is under pressure.
This good news contradicts the story fed by Russian propaganda and taken up by certain opposition parties in France. Western sanctions and support for Ukraine were to precipitate the recession of the European economy. The pressure exerted by the dissatisfaction of public opinion would end up shattering the unity of Europeans in the face of Russian aggression. The scenario did not happen and each day brings proof that the price to pay to defend our interests is not exorbitant and that the determination of the Twenty-Seven is not about to waver.
Certainly, in the coming months, the European economy will still have to face headwinds, with high inflation and energy prices which could start to rise again as soon as China turns the page on Covid. But, in the meantime, it is to be congratulated that the European Union (EU) has succeeded in containing the effects of the war on its economy.
If Russia could not avoid recession in 2022, it is also doing better than expected. This may not last, as the effects of the sanctions decided by the West are gradual and cumulative. The more time passes, the more their impact will intensify. The war in Ukraine is not only being played out on the ability of Europeans to support the Ukrainian war effort, it also depends on the economic balance of power between the EU and Russia. The first to crack will lose an important battle.