EU expecting recession as inflation remains high


The European Union is now expecting a recession, European Commission officials said Friday. The commission's economic forecast for fall 2022 predicted growth of just 0.3 percent, which is a cut of more than one percent from estimates back in July, Politico reports.
Officials believe the economy is shrinking and will continue to do so through the first quarter of 2023, fueled in large part by an "energy-driven cost-of-living" crisis resulting from the nearby war, Bloomberg writes. "Amid elevated uncertainty, high energy price pressures, erosion of households' purchasing power, a weaker external environment, and tighter financing conditions are expected to tip the EU, the euro area, and most member states into recession," the commission wrote. Germany, Latvia, and Sweden are actually expected to have negative growth in 2023.
"The EU economy is at a turning point," with the outlook having "weakened significantly," said EU Economy Commissioner Paolo Gentiloni. "Inflation has continued to rise faster than expected, but we believe that the peak is near." Interest rates are expected to increase in the EU as they did in the U.S.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
However, experts posit that a recession won't actually be enough to bring inflation down. The Economist notes that many are still seeing a hefty rise in energy prices, and that "prices for services and goods other than food and energy increased by an annualized 6 percent over the past three months," which "suggests inflation is spreading."
"Even a recession, if people expect it to be brief, may not tame inflation," The Economist writes.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Devika Rao has worked as a staff writer at The Week since 2022, covering science, the environment, climate and business. She previously worked as a policy associate for a nonprofit organization advocating for environmental action from a business perspective.
-
Supreme Court upholds 'ghost gun' restrictions
Speed Read Ghost guns can be regulated like other firearms
By Rafi Schwartz, The Week US Published
-
Trump sets 25% tariffs on auto imports
Speed Read The White House says the move will increase domestic manufacturing. But the steep import taxes could also harm the US auto industry.
By Peter Weber, The Week US Published
-
Trump allies urge White House to admit chat blunder
Speed Read Even pro-Trump figures are criticizing The White House's handling of the Signal scandal
By Peter Weber, The Week US Published
-
'Even authoritarian regimes need a measure of public support — the consent of at least some of the governed'
instant opinion 'Opinion, comment and editorials of the day'
By Anya Jaremko-Greenwold, The Week US Published
-
Waltz takes blame for texts amid calls for Hegseth ouster
Speed Read Democrats are calling for Defense Secretary Pete Hegseth and national security adviser Michael Waltz to step down
By Peter Weber, The Week US Published
-
Judge: Nazis treated better than Trump deportees
speed read U.S. District Judge James Boasberg reaffirmed his order barring President Donald Trump from deporting alleged Venezuelan gang members
By Peter Weber, The Week US Published
-
US officials share war plans with journalist in group chat
Speed Read Atlantic editor Jeffrey Goldberg was accidentally added to a Signal conversation about striking Yemen
By Rafi Schwartz, The Week US Published
-
Canada's Mark Carney calls snap election
speed read Voters will go to the polls on April 28 to pick a new government
By Peter Weber, The Week US Published