The financial sanctions against Russia have sent energy prices on an unprecedented hike, which, concurrently with the effects of the pandemic have left Europeans faced with a surging cost of living crisis. Experts warn that the situation is set to only get worse, with the devastating impact of a recession striking across European countries.
Jane Fraser, the CEO of Citigroup, has stated that Europe is “definitely” heading into a recession, that will leave people unable to cover the necessary cost of heating this upcoming winter.
She said: “A big concern there is going to be is the cost of heating in the winter.
“There is some confidence if it’s not a bad winter, the European energy industry probably has enough supplies to get through.
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“But if it’s a cold winter or if there are some more droughts with an impact on some of the more sustainable energy sources, it’s going to be a problem.”
As the West prepares to eliminate energy imports from Russia in response to the atrocities of the war in Ukraine, Ms Fraser claimed that the concern about Russian gas is “a tail risk that’s there”.
The bank chief noted: “I think the consumer is going to be hammered with the cost of energy and inflation.”
As the world strives to recover from the highly damaging impact of the pandemic on global economy, Ms Fraser was asked to compare the risk of a recession in Europe with that in the US.
In response, she explained that the US banking system has more flexibility than the European, and that the European Central Bank is lacking in handling inflation.
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The Citi CEO claimed: “It feels like the ECB is a few months behind where the US has been in getting its arms around inflation, and without quite the same flexibility that the US has.”
Comparing the handling of the crisis in Europe and Asia, Ms Fraser predicted Europe will face a “tougher time” since the Asian supply chains are more “recovery focused”.
With regard to Citigroup, she emphasised its large international reach as the most important characteristic.
She said clients appreciated the global set-up because the bank is anchored locally and would not just consist of a group of people who were just flown in.
Source: express.co.uk
