Experts urge Europe to rein in spending
According to numerous forecasts, the European economy has faced a real threat of a recession. An increasing number of experts are concerned about a looming economic crisis of stunning proportions.
Another alarming forecast was presented by experts at the Financial Times who called on local authorities and the population to reduce spending. According to them, the European Central Bank should stop providing massive funding for the eurozone economies and raise interest rates. Inflation in Europe jumped to 8.1% in May. Although it is time to tighten belts, EU nations are planning their spending under the €800bn recovery fund. Gross domestic product across the euro area rose by only 0.3% in the final quarter of 2021 and by 0.2% in the first quarter of 2022. Therefore, EU authorities need to take urgent action to avoid a recession, experts noted.
“The economic situation is ugly. <…> The months ahead will be miserable for European economies. Incomes will be squeezed, a recession is quite likely and interest rates need to rise, adding to pressures on households and families. It will be difficult,” the article says.
The brutal truth is that European countries should spend less, the author of the article summed up. Indeed, the region is a net energy importer, while a spike in oil and gas prices have had a profound effect on its member states.