The energy crisis, “comparable” to the oil shock of 1973, according to Bruno Le Maire
The current energy crisis marked by soaring prices is “comparable in intensity, in brutality, to the oil crisis of 1973”French Economy Minister Bruno Le Maire said on Wednesday.
A second massive public aid plan, on the model of the one at work during the Covid-19 crisis, “would only fuel the price increase”indicated Mr. Le Maire in the preamble to a conference on energy independence, in particular vis-à-vis Russia, which brings together political leaders, business owners, energy specialists and economists. “It would be like throwing gasoline on the fire”estimated Bruno Le Maire, also taking the example of the strategy in the face of the oil shock of 1973.
“In 1973, this response caused the inflationary shock that you know, led central banks to massively raise rates, which had killed growth”he said. “It has a name, stagflation, it is precisely what we do not want to experience once more in 2022”he estimated.
Europe is currently extremely dependent on Russian energy and is trying to find a solution for the next few months, at a time when prices are rising and the invasion in Ukraine has completely reshuffled the rules of trade with Moscow, once morest a backdrop of massive economic sanctions.
“The correct answer that we know is total independence”said Bruno Le Maire on Wednesday, going through the French and European tracks, notably through more gas reserves for next winter, the diversification of supplies, and the protection of low-income households and affected businesses.
On the last point, the gas price freeze in France, which will be extended to the whole of the year, will cost ” at least “ 10 billion euros said the minister, while the total energy support bill this year will be at least 20 billion although“It’s a safe bet that it will be higher”. “The State cannot be the insurer of last resort of the increase in all energy prices”however, warned the minister.