Ukraine crisis exacerbates Europe's inflation concerns

Significance

Concerns over energy supply from Russia increase the chances that inflationary pressures will persist throughout 2022, potentially worsening the cost-of-living crisis in many countries. Pressures will probably be more acute in those more dependent on Russian energy -- in Central-Eastern Europe, Germany and Italy.

Impacts

• Concerns over traditional energy supplies will embolden environmentalists and green parties to demand greater investments in renewables.
• Conflict in Ukraine will see increased energy cooperation between Europe and the United States.
• The cost-of-living crisis will put pressure on the EU to adopt a flexible approach to its fiscal rules beyond 2022.