March 25, 2023

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Europe trembles in anticipation of winter. The crisis caused by inflation and dependence on Russian gas is deepening

It happens, for example, in Germany. In turn, Italy, England, and Hungary face huge debts or depreciations of their national currencies, which attract price increases. In the most affected countries there are also large communities of Romanians.

Germany is paying dearly for its increased dependence on Russian gas

Germany, the first European economy, is paying dearly for the increased dependence on natural gas coming from Russia, which covered 55% of the requirement.

At the same time, they are facing high inflation of 10%. It is the highest value in the last seven decades. We are talking about the country from which the Romanians settled there send home the largest sums of money: over 400 million euros in the first four months.

Claudiu Cazacu, strategy consultant: “Their economy was based on cheap gas from Russia. German officials have announced that they will borrow 200 billion euros from the market to finance support schemes for companies and households affected by high energy costs. That means 5% of GDP, one of the most generous allocations at European level”.

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Michael Munteanu, Romanian settled in Germany: “The state helps us a lot. People are relaxed because they trust the German government. Money was paid, one time, 300 euros for all those who are in a work contract, as a kind of help for the energy money. Another 100 euros was paid per child, for families. In order not to get into a big problem with inflation, taxation on the salary will be done from 10,300 or so. Up to this amount is not taxed”.

The economic situation in Great Britain

The second country from which we receive money, over a billion euros last year alone, is Great Britain. And there the economic situation is complicated. 54% higher energy bills and inflation of almost 10% are forcing people to choose between food and paying utilities.

The state borrowed almost £150 billion. At the same time, for the population, those in charge came up with utility price caps and social packages.

For example, more than eight million English people receive an aid of 650 pounds to cover their expenses. Eight million pensioners will receive 400 pounds each.

Romanian settled in the UK: “Without these caps, we would have had 6,000 pounds. Now £2,000 a year”.

Omar Ali Ratteray, food bank beneficiary: “At midnight my paycheck comes in and by the time the sun comes up I’m broke again. Because in the meantime, I’m taking care of at least keeping the lights on, I’m taking care of the rent and everything, and there’s nothing left. I can barely float above the water. Most of the people I know are already underwater.”

Claudiu Cazacu, strategy consultant: “The lira recovered from the shock of the fall, a historic low. Prices go up because of energy.

Italy uses gas from Africa

Somewhat more cautiously, the Italian authorities moved immediately after the outbreak of war and managed to replace a large part of the natural gas coming from Russia with gas brought from Africa.

The Italians, however, have another problem. The country’s public debt is the second highest in the euro zone, after that of Greece, and would stand at 145.4% of GDP in 2022, according to experts.

According to a survey, three quarters of Italian households expect stinging bills.

Felicia Rapciuc lives in Rome and says that in the 21 years since she moved there, she has never paid so much for utilities.

Felicia Rapciuc, Romanian settled in Italy: “If last year I paid 22 euros, the kw part, now I paid 77. Three times more than exactly one year ago. We have to see what the government that must now be appointed will do. Social bonuses were given to people who fail to foot the bills. The VAT was reduced to 5%, some taxes were removed that were fixed on these invoices”.

The famous Italian pasta has risen in price by 20 percent. The town of pasta, Gragnano, is located right next to Naples.

Antonio Moccia, co-founder of a pasta factory: “Gas has doubled. Electricity increased from 8,000 euros to 39,000 thousand euros”.

Spain comes to the aid of the population with financial support packages

And officials in Spain quickly pivoted and managed to negotiate a lower price for the natural gas they import, especially from Africa.

Dependence on Russian resources is small, but even so, the chain price increase is felt in full.

The Spanish state comes to the aid of the population with financial support packages that represent 2.9% of GDP. And in these conditions, some are determined not to start the plants in winter.

Local: “Well, it looks like we won’t have any heat at all this winter. It’s about the price of gas, which is colossal now. It’s like paying another month’s rent in another apartment.”

Inflation in Belgium reached 11.27%

The situation is increasingly difficult in Belgium as well. Inflation reached 11.27%. In addition, the Belgians woke up overnight with bills five times higher. According to a recent survey, 45% of those who work are close to the poverty line.

Anca Pappa, social worker in Belgium: “A normal family bill, which used to be 200-250 euros per month for heat and electricity, now reaches somewhere around 1,000 euros, maybe more. Bearing in mind that in the normal budget of a family where there are two good salaries, with two children, the amount allocated for energy and heat cannot exceed 300 euros maximum”.

Those who cannot pay their bills on time are taken over by the state and given the status of “protected client”, and for them the tariff is below half the value of the lowest price on the market, without additions, which are borne by the state.

Anca Pappa, social worker in Belgium: “There is, so to speak, an army of social workers that you can go to for all kinds of information, in terms of heat economy, how you can save heat, how you can make a payment plan. The social worker makes the payment plan himself”.

Some have already moved into trailers. One man ended up paying 700 euros a month for gas and electricity, which is half of his pension.

Jacques Sonneville, local: “I live in this place three quarters of the time. It helps me to be economical and without heating. With 20 euros a week I manage to warm myself, I can cook. I have TV, I’m fine”.

Hungary is doing economy

In neighboring Hungary, economists expect the inflation rate to exceed 20% in November. The huge price increases are also caused by the instability of the national currency.

The Hungarian government cannot support price caps, so the support packages for the population are smaller.

However, the authorities save where they can. Theaters, libraries and covered beaches will be closed during the winter. At the same time, it will be only 18 degrees Celsius in public institutions.

Adrian Șimon, Romanian settled in Hungary: “In schools, in the fall, they should have had a week of vacation. They have merged and there will be an extended winter break from December 22 to January 6.”

As everywhere is bad, the European Parliament asked the Commission for packages with emergency measures to reduce the pressure of rising energy prices.

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