European Economy - News

The incoming winter may cause harsh winter life for the Europeans.

Europe started facing energy crisis and the incoming winter may cause harsh winter life for the Europeans. The depleted energy sources in the EU region and most of the third world nations started using their own energy reserve for their own manufacturing sectors all have added more scarcity of energy resources in the energy-starved EU.

The colonial era was a golden day for the EU nations as they could exploit the colonies to extract their energy resources and bring to the EU region countries to fuel their industries, steam ships and train engines. Now, the time has changed and the technology advancement has helped the third world nations to get access to machines and develop their own alternative technologies to manufacture everything they need. Besides, China has become a manufacturing hub of the world and still remains an issue.

Deteriorating relationship with the oil-rich countries in the Middle East and the Western powers again caused controlled supply of energy to the EU region. In addition, the invasion of NATO nations under the leadership of America to Iraq and the eventual fall of the Sadam Hussain regime caused the anger of the Islamic world and a kind of mistrust erupted between the Islamic world and the western powers. And what makes the oil rich countries now not to sell oil to the EU and other Western nations at a subsidized rate is all the outcome of that mistrust and advancing influence of the terror groups in the region that contain the movement of the oil from the Middle East to the EU.

As a matter of fact, the decision of the EU and NATO to keep their nuclear stock closer to the Ukraine border and trying to allure Ukraine to join NATO also angered Russia, and it has reduced the supply of energy to the EU region. The war in Syria and Russia and Western countries supporting two groups in Syria added more confusion and suspicion between Russia and Western countries.

Now, the world is moving through a kind of vacuum in leadership and sailing like a rudderless ship.

On one side, the EU and its members don't have means to compete with China or other upcoming economies. Secondly, America lacks a respected and influential leadership that the rest of the world takes seriously. China is trying to use check books to lure the small nations and set up naval and army bases across the Pacific belt again, adding more pressure to the Western world.

One has to wait to see the outcome of the energy crisis and its impact on the EU and its people.

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Inflation rising in Germany

Germany is being considered as the manufacturing hub of Europe, and it has shouldered the EU crisis more burden than any other nation. Yet, the same country faces inflation though its export income surpluses the import. Besides, Germany is still a surplus economy, and it has ever been one too.

The challenge is, the rising energy prices and the incoming winter, besides the lockdown and economic paralysis across the world, have now started pinching Germany. Supply chain blockade and pandemic lockdown all added more crisis to all economies in the world, but when it hits a country like Germany, the eye brows of the economists and investors rise alike.

This year the energy price has gone up almost 14% higher while the food price is again 5% higher than previous years. This is an alarming rate of the incoming economic crisis. When the low tide came in Germany, the Germany economy also went down. The inflation rate in the EU is now almost 3.4% and may rise a little more. Energy price rose by 17%, and the suffocating lockdown related to financial paralysis again added more pressure on the consumer index, which will have a related impact.

Lowering productivity and industrial output in the EU due to shortage of skilled labor and rising unemployment rate due to lock down resulting in low demand, all are adding chilly powder to the already burned skin of the EU economy.

Germany being the fourth largest economy in the world by GDP may lose some of its position if the country does not contain the inflation and the unemployment rate immediately. German women's fertility rate is just 1.38 children per woman and much lesser than the Japanese fertility rate. This adds more trouble in the future as it may cause a labor shortage and overall growth of the economy.

Germany being one of the most active racial sensitive nations, the arrival of foreign skilled laborers may invite wrath of the locals and racial discrimination and harassment may rise at an alarming rate. Most of the skilled laborers refuse to go to Germany due to racial attack on foreigners. Besides, mastering the German language may be a challenge to people.

As the world is opening up after the pandemic lockdown, Germany is gearing up to restart its export to many countries, especially to China and America, which are its most lucrative market.

The transparency and good relationship between the employers and the labor union makes the magic work for the German economy. German toddlers are skill seekers than reading books and learning nothing like in India. Most of them learn on-job-training, and by 22 years old they are useful for any industrial sector they choose.

And, it should be highlighted that the German workers preserve their job for tomorrow working a smaller number of hours than exhausting the job market. Their productivity and value, not the number of hours they sit in the office and factory,, make the German economy tick.

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Will sanctions against Russia affect Europe?

The war against Ukraine continuing is for more than ten days now, and the major reputed media have already turned their networks, channels, and platforms into a propaganda machine on behalf of their respective governments and have been sending false information damaging their own brand image.

War is not necessary today, and right now the world is licking the deep wounds humanity earned from the COVID-pandemic for more than two years now. The world united to fight against pandemics, from developing vaccines to sharing oxygen plants and extending financial and other logistic support, forgetting their financial and ideological war. That is the time when world leaders and heads of state are working around the clock, burning candles in an attempt to get the economy back on track. Then came this war!

Lack of experience in real politics landed the Ukrainian president in such trouble and he has invited more trouble for the Ukrainian people. Witnessing migration and cold weather and round-the-clock shelling and bombing by Russian forces, as well as the suffering it causes for civilians, is understandable but it could have been avoided.

The irony of this episode is that the EU and America refused to help directly engaging in the war, which was a shock for Zelensky, he never thought his allies would dump him in the middle of the war. Now he realized his mistake and seems to have given up the hope of NATO membership.

The western countries imposed many sanctions against Russia. It was something Russian president Putin expected. But the fact is that 76% of the oil required for Poland is supplied by Russia, and no country can substitute it in a short notice period the shortage of supply of oil reduced and natural gas from Russia. Secondly, from America to India, many nations have started releasing their strategic oil reserves into their domestic markets to control the oil price. Their reserves can solve the oil price only for a limited period. OPEC, Saudi Arabia, and Iran, the other sources from which they can buy oil, are unable to expand their production and supply chains so fast, and it demands a lot of investment. Even after expanding the infrastructure for such a short time, once the war ends, the money, the infrastructure, everything will go to waste.

Germany and Italy rely heavily on Russian natural gas too. When the supply of Russian oil and gas comes to an end, the price of oil and gas in Europe will rise, and household monthly expenses will skyrocket., banking and investment are all going to be affected.

The refugee problem from Ukraine and the total damage to the infrastructure of Ukraine due to bombing and shelling will add more pressure on the European economy. Oil is not a vegetable or perishable, for Russia, the rising price is boon, as they can sell oil at a high price in the market to other countries and compensate the loss. The oil price was $76 last year, and now, at $129 and increasing, it is expected to touch $300. That means Russia only needs to sell a quarter of the volume to earn the same amount equal to the amount they earned last year. This will give a good reserve for Russia.

Once the oil price increases, transportation, and house heating, are going to cost more for Europeans. Their already ailing economies, -except for the economy of France, Germany, and the UK -will suffer more.

Now, the question that comes in front of the world community is, "What is the practical solution?" The question has to be answered by the European nation's leaders and Ukraine. Does Ukraine believe after joining the EU, they will grow faster? Not sure.

What is NATO trying to achieve after taking Ukraine into its fold? Trouble in Russia.

Then who is suffering and going to suffer? Europe. This answer is loud and clear.

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