EU warned ‘Increasingly likely’ Putin will cut off gas supplies completely

Fitch warns that a complete shut-off of Russian gas supplies is increasingly possible, which could lead to the eurozone being driven into recession.

According to the rating agency, a complete shutdown of Moscow’s flows “increasingly seems like a reasonable assumption” when making economic predictions.

According to the report, this would result in a drop of 1.5-2 percentage points in eurozone GDP. It will rise to 2.5pp for Italy and 3pp Germany.

It said that the bloc would be likely to fall into recession in the second half of the financial year with Italy and Germany experiencing contractions in their GDP in 2023.

As Putin continues to reduce gas flows to Europe, the EU is racing to fill storage sites and find other sources of energy.

Fitch however warned that the bloc was still at risk of economic fallout, despite all the efforts. The damage will be amplified if there is energy rationing over winter.

Russian Deputy Prime Minister Alexander Novak stated on Thursday that Gazprom, the state-owned energy giant, will conduct maintenance on Nord Stream 1 within three days.

“Those are technical issues. Gazprom claims that the maintenance will be stopped for three days. Novak said to reporters, “We make our assumptions on that statement.” Novak was asked by reporters how long the maintenance would take.

Gazprom stopped flows from the pipeline to Germany Wednesday. A resumption is expected for Saturday morning.

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