Inflation in the eurozone hit a new record of 9.1 percent in August as energy and food prices continued to drift higher. The protests may just be the beginning of waves of public discontent and can worsen over time unless the EU leadership brings in something concrete to curb the suffocating cost-of-living crisis while pressing ahead with climate pledge.
Czechs Concerned: Higher Cost of Living, Soaring Energy Prices
Over the weekend, tens of thousands of Czechs took to the streets in Prague to protest against soaring energy prices and demand state help, in one of the largest demonstrations over the worst-ever utility bills crisis in decades.
The rally which gathered an estimated 70,000 people in central Prague came a day after the Czech government survived a no-confidence vote amid discontent and claims of inaction against spiralling inflation, already at levels unseen in three decades.
Year-on-year inflation in the Czech Republic reached a whopping 17.5 percent in July. The Czech National Bank predicted that inflation would peak at just above 20 percent in the coming months and slow down only next year.
Meanwhile, recent months have seen workers in France, Spain and Belgium go out on strike in the public transport, health and aviation sectors, demanding pay rises to tide their families over rocketing inflation.
High inflation triggered by the current energy crisis could fuel social unrest, protests and strikes, according to a recent survey covering France, Germany, Poland and the U.K. The survey, conducted by pollster YouGov for the NGO "More in Common", showed that the cost of living has become the most important issue for Europeans in these four countries.
Countries have been rolling out measures to slam brakes on energy prices. But experts believe the real effect hinges on implementation and policy coordination. The European Commission has come under fire amid mounting concern and doubts from some member states over its botched leadership as well as overdue and ineffective response.
To rein in soaring prices, the European Union is en route to impose historic interventions in the energy market including gas price caps and emergency credit lines for energy market participants.
On Monday, French President Emmanuel Macron announced that France and Germany will help each other through the energy crisis. After a videoconference with German Chancellor Olaf Scholz, Macron said France is ready to deliver more gas to Germany while the latter will offer more electricity to France, if the current energy crisis persists in winter.
Meanwhile, Sweden and Norway announced they were ready to launch a joint task force aimed at curbing the soaring power bills in the Nordic region, a decision announced following a meeting between Swedish and Norwegian ministers in Stockholm.
The Finnish government proposed to provide the country's electricity companies with loans and guarantees of up to US$10 billion to secure the sufficiency of their cash resources. Trade union leaders cautioned that a failure to act will hurt disproportionately lower-income families, and exacerbate deepening social divisions.
The protest on Saturday at Wenceslas Square in the center of the Czech capital unfolded with residents carrying signs calling for a new deal with Russia over gas supplies, a halt to arms sales to Ukraine and opposition to the European Union and NATO. Citizens demanded that authorities stick to military neutrality and ensure direct contracts with gas suppliers.
Cuts and suspensions of Russian gas supplies, which have occurred on and off since the start of the Ukraine crisis earlier this year, are widely feared to aggravate Europe's energy crunch and lead to a restructuring of the demand and supplies on the global market.
The ramifications of the surge in energy prices are seen everywhere in Europe, due to several negative factors, including the fallout of massive sanctions on Russia and the spillover of the United States' aggressive interest rate hikes.
To make matters worse, Russia's largest gas producer Gazprom announced it had stopped gas supplies via the Nord Stream I pipeline for an indefinite period due to malfunctions at a compressor unit.
While Germany is likely to bear the brunt as the cut-off threatens to halt industries, the overall EU economy will face risks of recession as a consequence. Credit rating agency Fitch Ratings said the eurozone was now set for recession due to the disruption of Russian gas imports and the lack of short-term substitutes.
Europe is heading towards a harsh winter, said Agathe Demarais, global forecasting director of The Economist Intelligence Unit. She said the continent should expect "two years of a very difficult adjustment with a lot of economic pain."
The Organization of the Petroleum Exporting Countries (OPEC) and its allies announced a small production cut for October to bolster oil prices that have recently slid over recession fears.