As the war between Ukraine and Russia continues, a problem that will plague the economies for years and cause a supply chain disruption as the food prices are expected to move high as a result of shortages of basic foodstuffs and Inflationary pressures will be triggered, which will continuously reduce the disposable income of the consumers.<\/p>\n\n\n\n
On the other hand, the puzzle of energy costs, which has moderately doubled as a percentage of business turnover, remains unsolved. Its share in the total overhead of a European company is constantly increasing. The increase in natural gas based on the data in one year approached very high levels close to 80%, while heating oil was appreciated by at least 50%.<\/p>\n\n\n\n
In terms of product price increases, either due to rising raw material costs or energy costs, inflation was close to 7.2% for the European Union. In this approach, two serious parameters that are also the scenarios of the next day should be taken into account.<\/p>\n\n\n\n
1. <\/strong>On average product price increases due to a pandemic wave and the inability of supply to meet the increased demand mainly for imported products from the wider Asian area or due to delays in transport deliveries, normalization and return to normalcy are expected when the reasons for concern disappear. controlling the pandemic and turning it into an endemic phenomenon. In this case, the resulting price increases and lingering inflationary pressures could be compared to rising interest rates (for more analysis on the effectiveness of interest rates for taming inflation please read the analysis entitled “The European Union is heading for Recession<\/a>“).<\/p>\n\n\n\n 2.<\/strong> With regard to price increases due to energy costs, the expected inflationary pressures fueled by these increases cannot be offset by rising interest rates.<\/p>\n\n\n\n The wave of accuracy due to the twin food and energy crisis not only pushes up the operating costs of businesses and causes a blow to market turnover, but also works discouragingly for investment initiatives and the creation of new jobs. Businesses are forced to make up for existing pandemic losses and at the same time deal with rising energy costs, with the governments’ budget margins being extremely limited.<\/p>\n\n\n\n A factor of additional concern is the impact on the cost of borrowing by the government and companies from the expected increase in interest rates. The search for the root cause of the problem, especially in the energy sector, begins with the phobic and hesitant management by the EU of globalization, which has led to a complete dependence on 50% of Russian coal, 48% of Russian gas, 32% of Ukrainian grain and 25% of Russian oil.<\/p>\n\n\n\n The numbers speak for themselves and strategies for phasing out Russian oil and gas will have to be put on the table, as they have to be adopted by 2027, otherwise member states such as Bulgaria, Austria and Germany will be led to ” sudden death “. However, the lack of storage space exists even if transfers from non-EU countries are secured, while the LNG market remains active until the creation of RES.<\/p>\n\n\n\n Ways to deal with the food & energy crisis<\/strong><\/p>\n\n\n\n The solutions to the food crisis are concrete:<\/p>\n\n\n\n 1. <\/strong>It is now necessary to mobilize deciduous agricultural land and even those land intended for biofuels. The decision of 5% of arable land as an ecological area without the use of fertilizers should be lifted.<\/p>\n\n\n\n 2.<\/strong> In addition, the European Union is tolerating the current embargo on export policies from Romania, Hungary and Bulgaria, and as alternative markets, supplies of cereals and feed could export their surplus to other EU member states.<\/p>\n\n\n\n 3.<\/strong> Increased investments in: <\/p>\n\n\n\n a. increase RES energy production, <\/p>\n\n\n\n b. increase in the number of nuclear power plants, <\/p>\n\n\n\n c. creation of storage facilities, <\/p>\n\n\n\n d. increase in the percentage of energy available under long-term contracts, <\/p>\n\n\n\n e. and strengthening the interconnection of networks between the member-countries of the EU.<\/p>\n\n\n\n The effects of the Russia-Ukraine conflict will cause for many years a food and energy crisis not only in vulnerable populations, but also in the global community (food stock disruptions, price increases, irregular supply chain operations, uncontrollable and unpredictable, unpredictable) . Implemented policies are needed to minimize disruption and ensure the functioning of international markets.<\/p>\n","protected":false},"excerpt":{"rendered":" As the war between Ukraine and Russia continues, a problem that will plague the economies for years and cause a supply chain disruption as…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[818,390],"tags":[3455,25,3390],"class_list":["post-8332","post","type-post","status-publish","format-standard","hentry","category-europe","category-politics","tag-energy-crisis","tag-eu","tag-food-crisis"],"_links":{"self":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/8332","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8332"}],"version-history":[{"count":2,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/8332\/revisions"}],"predecessor-version":[{"id":8335,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/8332\/revisions\/8335"}],"wp:attachment":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}