UKRAINE CRISIS: ENERGY IMPACT

European aboveground risks are rising in the face of the energy crisis. As it tries to compensate for lost Russian volumes, high gas prices and supply uncertainty will plague Europe until new ventures materialize mid-decade. This is undermining its competitiveness and transition strategy, threatening long-term growth. Despite its exceptional unity so far, tensions over gas policy and national fiscal responses are beginning to undermine the EU’s cohesion. Meanwhile, Europe is implementing tighter fiscal terms, including new windfall taxes, while gas market interventions are generating uncertainty. Security risks are also rising, exacerbated by the sabotage of the Nord Stream pipeline.

Economic pressures are heightening aboveground risks, from political unrest and sovereign debt defaults to windfall taxes and protectionist measures.