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Financial sanctions against Russia have sent energy prices on an unprecedented surge that has left Europeans with a mounting cost-of-living crisis at the same time as the impact of the pandemic. Experts warn that the situation will only get worse as the devastating effects of a recession hit all European countries.
Jane Fraser, CEO of Citigroup, has said that Europe is “definitely” headed for a recession that will leave people unable to meet essential heating bills this coming winter.
She said: “A big concern will be heating bills in the winter.
“There is some confidence that if it’s not a bad winter the European energy industry will probably have enough stocks to get through.
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“But if it’s a cold winter or if there are more droughts that affect some of the more sustainable energy sources, it becomes a problem.”
As the West prepares to eliminate energy imports from Russia in response to the atrocities of the war in Ukraine, Ms Fraser claimed concerns about Russian gas are “an existing tail risk”.
The bank chief remarked, “I think the consumer will be burdened with energy costs and inflation.”
As the world scrambles to recover from the pandemic’s highly damaging impact on the global economy, Ms Fraser was asked to compare the risk of recession in Europe to that in the US.
In response, she explained that the US banking system is more flexible than Europe’s and that the European Central Bank lacks inflation.
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The Citi CEO claimed, “It feels like the ECB is a few months behind where the US is getting a handle on inflation and without the same flexibility that the US has.”
Comparing how Europe and Asia are coping with the crisis, Ms Fraser predicted that Europe will face “harder times” as Asian supply chains are more “recovery-focused”.
Looking at Citigroup, she emphasized the large international reach as the most important feature.
She said clients appreciate the global footprint because the bank is local and not just a group of people flown in.
