The old continent "is entering a state of recession... How will Europe's political position be affected?

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Afrasianet - The official announcement of the figures for the first quarter of the year 2023 was heavy on the political circles in the old continent, and the press and media circles met with great dissatisfaction, especially since the European Commission expected, last month, growth for the rest of the year across the eurozone.

The European Union region has officially entered into a "technical" economic recession, after the European Union's statistics agency "Eurostat" announced, in a report issued today, Thursday, that the GDP of the EU countries was negative during the first quarter of 2023, for the second quarter in a row.

Although many economists, research institutions, and study centers warned during the previous period that the European Union was heading towards economic stagnation for many reasons, the official announcement of the figures for the first quarter of the year 2023 was very heavy on the political circles in the old continent. Press and media circles with great dissatisfaction.

The American "Politico" website indicated that "European politicians, who have always been optimistic about the continent's ability to resist the great economic pressure that it has gone through during the past years, especially after recovering from the "great recession" in 2008 and after the "Covid-19" crisis. 19”, they appeared today as immature in their positive analyzes.”

Last month, the European Commission expected growth for the rest of the year across the “euro” area, and “Eurostat” also shared its predictions of “slight growth”, but it returned and lowered its hopes that the continent would witness an improvement, after Germany – the largest economy in Europe – announced at the end of the month. In the past, it entered a recession.

Fundamental reasons Among the main causes of the economic downturn is the state of persistent inflation, which was added to the rise in interest rates and the decline in demand in countries that use the euro as their currency.

Persistent high inflation Inflation, which reached 8.1% last April, the same level as it was in the same period last year, led to the continuation of the suffering of European citizens, who lost a significant part of their purchasing power, at a time when the numbers of electricity and gas bills were doubling. and basic services, which doubles the weight of the crisis on the ground. raise interest rates Inflation was added to the European Central Bank’s attempts to support the currency by raising interest rates, in line with the path started by the US Federal Reserve,

which raised the interest rate by 0.25% last month, for the tenth time in a row in 14 months.

European banks are closely linked to their American counterparts, and therefore the interest rate in European banks became 5.25%, after it was close to zero in March 2022. Also read:

The European Union: Washington's economic policies harm Europe and disintegrate its market This led to making investments and their risks an unprofitable paper, and the accumulation of money in banks, which prompted the exacerbation of the speed of the European economy heading towards recession, in the first quarter of the year.

Loss of Russian gas

Likewise, the loss of Russian natural gas greatly affected the economy, especially in industrialized countries such as Germany, which caused energy prices to rise, and hundreds of industrial establishments were forced to close their doors, causing inflation to swell again.

In addition, the European Agency's figures revealed the disparity in economic development among the eurozone countries. While Luxembourg achieved the strongest quarterly growth of 2.0%, followed by Portugal by 1.6%, sharp declines were recorded in Ireland by 4.6%, in Lithuania by 2.1%, and Germany's quarterly GDP fell by 0.3%.

Increasing spending on armaments and supporting Ukraine The Ukrainian war exacerbated the economic crises that the countries of the European continent and the Union were going through.

In addition to being affected by the direct and indirect damages of the war, such as the severance of relations with Russia, the rise in energy prices, and the refugee crisis, the European political position, which is strongly involved in the war and biased towards the Ukrainian side, has led to multiplying the effects of the war on Europe.

Estimatingly, the announced European aid to Ukraine, in its various military and civil forms, amounted to about $15 billion, and is expected to reach about $50 billion during the coming period, if Europe adheres to its pledges to support Ukraine, according to the tracking and statistics centers.

Excessive use of existing arsenals has also led to the depletion of most of them, as European voices have recently risen calling for an emphasis on the better and broader rearmament of European armies, which will mean more semi-closed spending between the government and major arms companies, and will deprive the government of the potential to spend on supporting the service and production sectors. Also read:

Inflation in Europe is worrying... and prices continue to rise Dimensions and repercussions of the European economic crisis.

Differences and divisions on the horizon There is increasing talk among observers of European affairs that the expected continuation of the economic downturn in Europe, which some suggest may worsen according to the results of the ongoing war in Eastern Europe, and according to the climatic conditions of the coming winter, will lead to an exacerbation of internal disputes between its members, especially since some countries do not It still sees itself in a position far from the war and its harsh effects, in contrast to other countries that suffer much more, as Eurostat figures showed.

The continuation of the state of economic recession, in addition to the possibility of its exacerbation, especially at the gates of next winter, will mean that the purchasing power of European citizens will continue to erode, in exchange for an increase in pressure on living, which may increase the size of the divisions between the European political components, especially with the emergence of differences In view of continuing the war.

A decline in political weight.. versus Washington In the same context, economists point out that the continuation of this crisis will consolidate European economic dependence on the United States, and will lead to an increase in the dependence of its capitals on Washington, whether in criticism or in the nature of economic trends and the size of the sacrifices that the continent must make in the war that Washington is leading. against Russia and China.

And at a time when Europe's need for China to move its economy is increasing, Europe has withdrawn its objection to Joe Biden's economic plan in the United States, which was strongly opposed by French President Emmanuel Macron, because it would lead to the transfer of industry from the old continent to America.

US policies aim, as it has become clear, to focus on the conflict with China in the coming period, which means that Europe, which has not yet built policies independent of Washington, may roll into a confrontation with Beijing similar to what is happening now with its neighbor Russia.

This means that the main focus of European policies during the coming period may be directed towards trying to contain and control the economic crisis, in order to prevent the old continent from losing the rest of its political weight and position among the global political poles.

The economic situation in Europe, if it deteriorates further, may lead to increased pressure on governments to accept settlements to end the war in Ukraine as soon as possible, which they still reject so far.

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