ECONOMIC OULOOK FOR EUROPE

1. Higher energy prices and trade disruptions could destabilise EU firms already weakened by the pandemic.
2. Rising inflation could push more Europeans under the poverty line. Households will be hit differently across and within countries?
3. Real economic growth in the European Union is now expected to fall below 3% in 2022, down from the 4% estimated by the European Commission before the war. A recession could happen, and further trade disruptions or increased economic sanctions would increase the risk for the European economy. 
4. Heightened uncertainty and higher food, commodity and energy prices are impacting investment and sustainable and inclusive economic development
5. Inflation and higher energy prices pose a new risk to EU firms already weakened by the pandemic. The proportion of firms at the risk of default could rise from 10% to 17%.
6. Inflation could reduce real private consumption in the European Union by 1.1%, although the impact will vary across countries. The impact will be felt more in countries where consumption is more sensitive to energy and food prices and where a relatively large share of the population is at risk of poverty. Countries in Central and South-Eastern Europe tend to be more affected.
7. The increase in food and energy prices will hit low-income households disproportionally, but to varying extents across EU Member States. Lower-income households in the richer countries of Northern and Western Europe are better able to absorb the price rise than households in Central and South-Eastern Europe, largely because savings rates and incomes overall tend to be higher. 
8. Firm’s vulnerability will be exacerbated through a reduction in exports;  lower profits due to higher energy prices; and difficulty finding funding as banks avoid risk. 
9. The proportion of firms losing money will increase from 8% to 15% in one year,  chemicals and pharmaceuticals, transport, and food and agriculture are the sectors hardest hit.
10. Firms in countries closer to Ukraine and Russia, such as Hungary, Poland, Latvia and Lithuania, will feel the pressure.
11. Companies in Greece, Croatia and Spain will also suffer more than the EU average. 
12. The finances of EU Member States will likely deteriorate
13. Spending will  increase as countries implement redistributive measures to help households cope with energy price increases, and increase military spending.
14. Revenue is also likely to be lower than planned given the slowdown in economic activity, just as military spending is set to rise.
15. Overall, budgets are expected to be most affected in EU members neighbouring Ukraine and in the Baltics.

Inflation Rate in EU Countries (June 22)

1. Estonia: 21.9 %
2. Lithuania: 21.0%
3. Latvia: 19.3%
4. Czech Republic: 17.2%
5. Bulgaria: 16.9%
6. Poland: 15.5 %
7. Romania: 15.05%
8. Slovakia: 13.2%
9. Croatia: 12.1%
10. Greece: 12.1%
11. Hungary: 11.7%
12. Slovenia: 10.43%
13. Spain: 10.2%
14. Belgium: 9.65%
15. Cyprus: 9.6%
16. Ireland: 9.1%
17. Portugal: 8.7%
18. Austria: 8.7%
19. Sweden: 8.7%
20. Netherlands: 8.6%
21. Denmark: 8.2%
22. Italy: 8.0%
23. Finland: 7.8%
24. Germany: 7.6%
25. Luxembourg: 7.4%
26. France: 5.8%
27. Malta: 5.8%