The sanctions that the West has put on Russia are having some ripple effects, and the Eurozone is one of the places where those effects are starting to pop up. In Germany, they’re putting in place the first steps of some emergency measures to make sure that if Russia cuts off gas supply (which it’s threatening to do), Germany won’t be stuck up a river of geopolitical moral high ground without a paddle.
Meanwhile, the Spanish inflation rate has gone up to almost 10% based on recent reports – the most in nearly 40 years – driven by food, electricity and fuel. More reports will come out in the next few weeks that will paint a better picture, but right now, economists are saying this isn’t a great sign.
“This is about monitoring the situation,” German Economy Minister Robert Habeck said at a press conference. “There are two more steps, the alarm and the emergency phase, but we are not there yet. The situation would have to worsen dramatically before we reach those stages. We would then practically need a change in the supply lines and would have to react accordingly.”
“The increase represents a huge cost-of-living shock in the country, which will weigh on domestic consumption and risks derailing Spain’s recovery from the pandemic,” said Maeva Cousin, a senior euro-area economist at Bloomberg.
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