A year has passed since the start of the Russian-Ukrainian conflict on February 24, 2022. A situation that has not spared France and Europe, which have suffered the brunt of the repercussions of a conflict in its doors: Inflation, energy crisis, economic repercussions… one year later, the toll is heavy.
INFLATION AND THE ENERGY CRISIS
If inflation did not wait for the Russian-Ukrainian conflict to make itself felt in Europe, it clearly aggravated the situation during the past year. Price increases have reached record levels in France. According to data from the National Institute of Statistics and Economic Studies (INSEE), annual inflation thus stands at 5.2% for 2022, following an increase of 1.6% in 2021 and 0 .5% in 2020, with increases observed mainly in energy (+23.1%), food (+6.8%) and to a lesser extent manufactured goods and services, which increased by 3 %.
The year 2022 thus recorded record energy price levels, natural gas on the European wholesale market reached 340 euros per megawatt hour (MWh) on August 26, once morest just under 30 euros at the same period of the previous year. Same thing for fuel. In France, an absolute record for the price of diesel fuel at the pump was reached at the beginning of March 2022, at 2.14 euros per liter, and several peaks throughout this year.
Faced with soaring energy prices, the tariff shield introduced in 2021 by the French government has been extended and extended, in particular for small businesses. And an Energy Sobriety Plan was officially presented on October 6, 2022 to encourage the French to reduce their consumption.
A DIRECT IMPACT ON HOUSEHOLDS AND BUSINESSES
The baguette, essential for the French, is an indicator of the cost of living. During the year 2022, its price has been increased several times, passing in many bakeries the symbolic threshold of one euro. At the same time, the price of wheat went from 180 to 460 euros per ton at the start of the conflict, to stabilize around 360 euros per ton. A surge in prices that directly affects the consumer’s wallet.
Thierry, who lives in the inner suburbs of Paris, cannot believe it. “It’s simple, before when I went to the supermarket, I paid around 100 euros. Now, each time it’s more like 120 euros, that’s 20% more.” Same observation for Hélène. “Before, I didn’t pay much attention to prices when I was shopping, but with inflation, I watch more carefully. buy more.”
As for energy, many French people have chosen to lower the temperature of their homes. Daphnée, who lives in an old pavilion with an area of 130 square meters, drastically lowered the thermostat for fear of seeing her bill explode. “I am chilly so it was a sacrifice, but finally I realized that we were very well at home with 18° C, all you need is a hot water bottle for the night”, she indicated.
After the extraordinary rebound for companies coming out of the COVID-19 crisis, these in turn have been hard hit by energy costs. Asked regarding business failures last Monday, October 17 on France Info, the French Minister for Industry Roland Lescure estimated: “There are approximately 350 companies today that are really facing significant difficulties due to of the energy crisis.”The major challenge is to preserve the productive apparatus, to support employees, so that activities are closed to a minimum,” he added.
And the trend might continue. “The rebound in bankruptcies that began in 2022 is not over. The reserves accumulated since the recovery have made it possible to absorb the shocks in 2022, at least in part, but this resilience of companies faces a triple threat for 2023: weaker growth, reduced margins and deteriorating financing conditions, “we learn in a press release published on February 15, 2023 following the publication of a new study relating to business failures produced by AU Group and EY.
THE UKRAINIAN CRISIS WEIGHS HEAVY IN EUROPE, BUT ALSO MAKES WINNERS
The President of the European Commission Ursula von der Leyen announced on February 15, 2023 a tenth package of sanctions once morest Russia, following a series of which the first came into force the day before the start of the conflict in Ukraine, on February 23, 2022.
Some are wondering a year later regarding their usefulness. Contrary to forecasts, the Russian economy is holding up despite the sanctions. According to a report by the International Monetary Fund (IMF) published on 31st January, Russia did indeed fall into recession last year, but the drop in GDP was only 2.2%. According to this report, the Russian economy should even pick up once more with a slight increase of 0.3% in 2023 then 2.3% in 2024, i.e. more sustained growth than that of the euro zone for this period.
If the Ukrainian crisis weighs heavily in Europe, it also makes winners. On the other side of the Atlantic, the order books of the American military industry are exploding and the American liquefied natural gas (LNG) comes at the right time to meet the needs of Europe, deprived of Russian gas. In the first 11 months of 2022, US LNG exports jumped 137% compared to the same period of 2021, according to figures from Kpler.
The consequences of the Inflation Reduction Act (IRA), a massive US$369 billion industrial subsidy plan announced in summer 2022, pose a new trade threat to Europe.
In a speech on decarbonization strategies on November 8, 2022, French President Emmanuel Macron expressed concern regarding the consequences of this situation. “The United States is a producer of inexpensive gas that they sell to us at a high price. In addition to that, they have taken massive state aid measures in certain sectors that are completely outside our market projects,” he warned in his speech.
Faced with these American protectionist measures, which might seriously penalize Europe by causing industrial relocations, Brussels has just presented its response at the beginning of February with a “Green Industrial Plan”. If
