The escalation of tension between Ukraine and Russia is a cause for concern for Spainalso for economic reasons, since the open crisis threatens to make the price of energy even more expensive and, therefore, it would torpedo the forecast that inflation will begin to relax from spring. The warning has been launched by economists and researchers consulted by EFE, who downplay the direct effects of the conflict but warn of its indirect impact due above all to Europe’s dependence on Russian gas. around the 40% of the gas consumed in Europe comes from Russia, although the percentage varies considerably between countries: in some cases it reaches 80%, while for Spain it represents a modest 9.8. However, the turbulence would cause price increases in the electricity market, which would affect the entire continent, to which would also be added the "domino": Among the most affected countries are some that maintain strong economic ties with Spain, such as Germany, and exports or tourist flows could suffer. Experts also point to the psychological effect on the population of this type of tension, which pushes to restrict private consumption -considered the great engine of the Spanish economy-, all this in a context marked by uncertainty due to covid-19 and with the recovery still halfway.
IT ALL DEPENDS ON THE REACH
The researcher and director of the Elcano Royal Institute’s Energy and Climate Change Program, Gonzalo Escribano, explains to EFE that the impact of the crisis on energy prices will depend on the magnitude of the measures adopted against Russia and even where the conflict rages.
The impact is "unpredictable"but it will be very high if the crisis leads to an open confrontation with Russiaaccording to Escribano, who for the moment rules out Moscow being excluded from the international energy payment system, as has already happened with Iran, something that would be "very disturbing" for the sector and for the global economy. Although Spain depends to a small extent on Russian gas, "if gas rises in Europe, it will rise in Spain, and with it the electricity bill"since gas is what sets the price of electricity.
IMPACT ON INFLATION
"There is additional demand for gas due to efforts to reduce coal and meet environmental targets, and gas indirectly makes electricity more expensive"explains the director of the International Situation and Analysis of the Savings Banks Foundation (Funcas), Raymond Torres.
The evolution of the electricity bill is key for the Spanish economysince in 2021 the rise in energy prices explained practically half of all inflation, which on average stood at 3.1% -the highest figure in the last decade- and ended December at 6.5% -record since 1992-.
"It would be a very important indirect effect, because we already come from very high prices. In Europe, the whole world expects inflation to drop starting in the spring thanks precisely to the moderation of energy"insists Torres, who warns that if the phenomenon continues, pressure will increase to raise wages and that the European Central Bank (ECB) raise interest rates, among other measures. Likewise, conflicts reduce the spending of households, companies and investors: "When private consumption falls, the States can take over to keep the economy afloat, but at the moment in Spain the public debt is around 120% of GDP and there is not so much room for additional stimuli". The chief economist for Europe at the Oxford Economics consulting firm, Ángel Talavera, abounds in the idea that the interconnection of the raw material markets means that Spain "can’t dodge the impact" despite the geographical distance from Ukraine and Russia, and insists that the weight of energy in inflation is much higher in the country than in the European average.
"The escalation of tensions is more than likely to be reflected in higher inflation for a longer time, with the impact that this has on consumption, public accounts…"lists Talavera, who also cites among the risks the financial instability associated with any conflict, with severe falls in the stock market.
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