Citigroup has warned that Europe is “definitely” heading into a recession amid the energy crisis hitting the European economy due to the ongoing Russian invasion in Ukraine.
On Friday the European Union announced their sixth stage of sanctions against Russia which has sent energy prices to unseen record energy prices.
Europe including the UK have been left with the spiraling cost of the living crisis and there are concerns that if there is a bad winter then energy could be rationed.
Jane Fraser, the CEO of Citigroup, has warned that Europe is “definitely” heading into a recession and people will be unable to cover the cost of heating in their homes this winter.
She said, “A big concern there is going to be is the cost of heating in the winter.
“There is some confidence if it’s not a bad winter, the European energy industry probably has enough supplies to get through.
“But if it’s a cold winter or if there are some more droughts with an impact on some of the more sustainable energy sources, it’s going to be a problem.”
The European Union announced that they will no longer be dependent on Russian gas by the end of the year in response to the Ukraine invasion and there are concerns that there is a “tail risk that’s there” over the EU cutting Russian gas.
Fraser warned, “I think the consumer is going to be hammered with the cost of energy and inflation.”
The Citigroup CEO said, “It feels like the European Central Bank is a few months behind where the US has been in getting its arms around inflation, and without quite the same flexibility that the US has.”
Fraser predicted that Europe are to face a “tougher time” as the Asian supply chains are more “recovery focused” compared to Europe.