Rising energy prices could push UK inflation as high as 18% next year according to Citi. European gas prices rose sharply this week due to supply fears, after Gazprom Russia’s energy firm announced it would shut down the Nord Stream 1 pipeline – the main gas supply line to Europe – to complete three days of unplanned maintenance.
Has recently been some good inflation news, europe is not nearly as lucky where all european countries except for france and switzerland are expected to have higher inflation in 2022 than the united states based on recent oecd estimates. recent surge in energy prices was likely to drive german inflation above 10 per
Cent this autumn and keep it elevated next year. prices charged by german industrial producers rose 37.2 per cent in the year to july, the highest increase ever. they expect the u.k. inflation rate to hit one of the biggest reasons for the difference in inflation rates is energy costs, and in particular benchmark
European natural gas contract week. that would be around $490 a barrel on the cost of natural gas in the united states price. that is because the u.s became a major energy producer in recent decades while europe reduced their production of fossil fuels and relied on russia as a major supplier of oil
And gas. those imported supplies have declined the uk energy regulator ofgem is expected to announce this friday an increase in the energy price cap, to more than £3,500 for an average household’s energy needs. that is an increase of 75 per cent on current levels. this means that more than 10% of the average
Household income in the uk will be spent on energy. continental the cost-of-living crisis is made worse by falling inflation adjusted wages. real wages in the uk fell at the fastest rate for at least 20 years in the second quarter of this year. this squeeze occurred despite strong pay growth and a lively jobs
Market. wages actually went up by 4.7% in nominal terms over the period, but the rise in pay was dwarfed by the rocketing cost of living. certain commodities like milk which have seen no price rises in over a decade are now up 40% in the last year in europe, while being up only 15% over the same time period in the united
States. why has the price of milk gone up so much? well, two of the biggest inputs for dairy farmers are cattle feed and fertilizer which are up 83 per cent and 179 per cent respectively over the is mostly driven by the cost of natural gas, and of course the cost of cattle feed is driven by the cost of
Fertilizer and transportation. of europe from italy to the united kingdom. an unusually dry winter followed by a hot and dry summer have caused record low river levels. this shortage is affecting nearly all sectors from agriculture to the shipping industry. the low river levels mean that cargo ships have had
To reduce their loads leading to higher of 11 per cent last month marking the 12th consecutive monthly rise. in the rest of europe house prices and rents have been rising too. despite all of the talk of the shift to in the uk small and medium sized enterprises which together employ around three-fifths of
The uk workforce are feeling the squeeze from increasing wage bills, higher raw material costs, brexit. in the second quarter, almost all small businesses in the hospitality, manufacturing, construction and retail sectors reported higher year. the uk federation of small businesses has predicted that this winter
More than five percent of these businesses could go under. in the past many of these businesses would have struggled to pass on the cost increases they are seeing to their customers, but the media spotlight on russia’s invasion of ukraine has made customers cost increases are coming at europeans from all angles. in
The united states only floating rate mortgages. americans typically most european mortgages on the other hand are floating rate loans with a fixed rate for just the first five years. the type of mortgages available varies by country within europe too, with adjustable-rate mortgages most common in
Because of the historically low interest rate twenty years, the total debt service burden despite continuously rising levels of household made households significantly more exposed most uk borrowers have mortgages where the interest rate is currently fixed for the next short while, but about 1.3 million of
Those year and another 1.8 million are expected to expire next year, according to uk finance. rising interest rates will cost many borrowers in a sign that uk pensioners are feeling increasingly vulnerable about their financial position, the data shows a jump in the number staying in employment. this
Rise is likely to have been caused by a desire among those of inflation in the uk is not just it is also hitting the government hard. britain pioneered the issuance of inflation-linked bonds, in the 1980s with the idea that the government’s commitment to reducing inflation would directly now exacerbating
The pain of excessive debt. inflation linked bonds make up almost a quarter of total uk central government debt which compares to 8 per cent in the united states and around 5 per cent in germany. uk government interest payments in june more than doubled – with this increase being entirely down to the rise in
So, inflation is a real problem in europe right now, and while there are many factors playing russia, while part of the problem is by no means entirely to blame. in the 1960s and 1970s, europe was producing roughly the same amount of natural gas that it was using, but production began to decline as the north sea gas
Fields depleted, extraction – the netherlands has the largest europe has been reducing its dependence on fossil fuels, (particularly coal) in order to reach its climate goals. germany even passed a law to phase out nuclear power altogether, the fukushima disaster in japan. interestingly japan today
Announced a plan to restore nuclear power due to the ongoing global power crisis. stations last december and the final three nuclear power stations are scheduled to be decommissioned this coming december, many are obviously arguing that these plants should be kept running due to the current energy situation. belgium,
Switzerland and the uk have been reducing their nuclear power for these reasons, european nations have become increasingly reliant on russian natural gas to fill the gap between the phase out of their existing energy supplies, and their transition to zero emissions renewables and storage which they plan to eventually
Use as a full replacement. the risk for europe of overdependence on another problem in the european energy markets is the way the eu’s energy pricing system works. it operates on a model where wholesale electricity costs reflect the price of the last unit of energy most of the time, natural gas is the fuel that is
Needed to make sure enough energy is supplied to meet demand. so even in countries like france — where cheaper nuclear power provides around 70 percent of electricity — natural gas prices still drive the wholesale electricity price. price of electricity. part of the reason european energy markets are structured
This way is that it means that all suppliers in the market, including cheaper to generate wind or solar installations, get the price paid for the most expensive offer accepted. this subsidizes the capital-intensive in contrast to europe, the u.s. has become a major energy producer in recent decades, infrastructure,
The us can’t ship sufficient for much of the last decade the world economy got by on the shale oil boom and without us production more than doubling between 2010 and 2019, oil production — oil drilled without fracking or from tar sands — stagnated over that period. world economic growth still does require fossil
Fuel production, and without more investment and exploration, there is unlikely to be sufficient the demonization of the fossil fuel industry – one of the most important industries in the world – has meant that traditional energy projects have been starved of investment for quite some time. politicians are surprised when
Oil companies return capital to investors rather than investing in new production, but equally they tell these companies that they will be shut down in the near future and replaced with other sources of energy. the recent lack of investment in reliable energy impacted the supply side of the equation. dollars
In investment has been postponed or a large part of that related to the esg a new european law was approved this month by the european parliament designating natural gas very little can be done to immediately accelerate any transition from fossil fuels. which are a good idea – will not be completed
Grids on base loads of solar and wind power electricity storage, and will equally require huge extraction of lithium nickel cobalt and copper, more offshore drilling, of the kind opened up in the gulf of mexico and alaska by biden’s or investors becoming willing to pour in capital with no regard for the prospect of
Profit, require decades of production to break even and eventually provide a return to investors. right now oil and gas companies are being told regulations long before they reach breakeven. difficult – or prohibitively expensive – for homeowners to adequately insulate their homes, modern insulation would
Greatly increase energy efficiency. it has up until recently been seen as more important to preserve the historical appearance of buildings than to install things so far, eu energy policy has been unsuccessful it has given europe some of the world’s most expensive, but clean energy. consumer protection, supply
Security and price moderation have not been prominent objectives for the eu up until now. considering reopening coal-fired power plants norway and the netherlands have the potential to step up oil and gas exploration and production, but this may not happen for political reasons. to be clear, i’m not advocating for abandoning
All environmental policies, but it can be argued that additional co2 emissions from european sources would simply replace russian co2 emissions, and that fossil fuel extraction within europe would likely adhere to higher environmental standards right now, european governments are trying to alleviate the pressures
On households and small businesses of the cost-of-living crisis, this involves state funding to reduce rising energy bills by subsidizing distributors, as in france, or transferring money to citizens to pay those bills, as in the uk or big subsidies for in a world of global trade, even if the u.s. does avoid a
Recession, sluggish european growth could if you enjoyed today’s video, you should day and see you again soon, bye!
Transcribed from video
The European Cost Of Living Crisis! By Patrick BoyleliveBroadcastDetails{isLiveNowfalsestartTimestamp2022-08-25T003011+0000endTimestamp2022-08-25T004831+0000}