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6 Oct, 2022 13:38

Europe faces deindustrialization and social unrest – Belgian PM

Soaring energy prices will lead to drastic long-term consequences on the continent, Alexander De Croo told the Financial Times
Europe faces deindustrialization and social unrest – Belgian PM

Europe could soon face a significant reduction in industrial activity and social unrest unless something is done to lower energy prices before winter sets in, Belgian Prime Minister Alexander De Croo has warned.

In an interview with the Financial Times published on Thursday, he said that unless there was an intervention in the gas markets, “we are risking massive deindustrialization of the European continent and the long-term consequences that might actually be very deep.”

De Croo insisted on a multi-layered approach to the gas crisis, which he says should include a hard price cap on Russian natural gas, negotiations with suppliers such as Norway and Algeria, and a “dynamic” limit on the price of liquefied natural gas (LNG), which he suggests could be set slightly above prices in the US or Asia to ensure continued flows to Europe.

The Belgian leader also warned that governments must be “prudent” not only to counter soaring inflation, which stems from high energy prices, but also tackle the risk of social unrest that comes with it.

“Our populations are getting invoices which are completely insane. At some point, it will snap. I understand that people are angry . . . people don’t have the means to pay it,” De Croo told the FT.

His comments come after thousands of demonstrators rallied in Brussels in late September to demand higher wages and lower energy prices after it was revealed that some 64% of the country’s citizens were afraid of not being able to pay their energy bills which had reached a staggering average of €700 ($690) a month.

The Belgian PM had previously warned that “the next five to ten winters will be difficult” in Europe due to record gas prices, but stated that Belgium would endure the crisis “if we support each other in these difficult times.”

Gas prices in Europe surged earlier this year after Russia launched its military operation in Ukraine in late February. After the EU and other Western countries imposed sweeping sanctions on Moscow and began a campaign of cutting themselves off from Russian energy supplies, gas prices hit record levels, leading to a rise in overall inflation on the continent.

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