Economy

The “worrying” disparity in clean energy investments between the advanced economies and the developing nations was put into the spotlight this week, ahead of the G7 leaders meeting.G7 economies account for about a quarter of the global energy-related carbon emissions that are behind global warming. The leaders’ meeting comes as all economies grapple to end their reliance on Russia for fossil fuel supplies as prices spike in the wake of the invasion of Ukraine.The latest International Energy Agency world energy outlook report released last week said that while global clean energy investment had increased since the Paris climate accord was adopted in 2015, the “weakness” of clean energy investments across the developing world was “one of the most worrying trends”.“Much more needs to be done to bridge the gap between emerging and developing economies’ one-fifth share of global clean energy investment, and their two-thirds share of the global population,” the IEA said.The IEA cited scarce public funds, highly indebted state-owned utilities and a worsening global economic outlook as factors that made it more difficult for developing economies to invest in clean energy projects.The agency advocated for financial and technical support, including concessional capital, private sector capital, and inflows from international carbon markets, as “crucial” for closing the gap.The IEA also warned global investment levels in the power sector over the past three years had fallen short of the level needed to meet countries’ climate pledges, and would lead to a failure to meet the net zero global emissions target by 2050 that is required to curb climate change. The IEA estimated global investment into power in 2022 totalled about $975bn, versus an annual requirement of $1.2tn to achieve countries’ stated policies, and $2tn to reach net zero. It said a rapid acceleration of investment was needed in renewable technologies, alongside reduced dependency on fossil fuels, for the world to reach a 1.5C stabilisation of the rise in average global temperatures. Temperatures have already risen about 1.1C since pre-industrial times.Power investments in emerging market economies needed to grow at a compound annual growth rate of 25 per cent to reach net zero levels, the IEA said — or twice the pace of advanced economies. Leaders of G7 countries are expected to discuss global energy demands when they meet in Germany on Sunday. Germany’s chancellor Olaf Scholz gave assurances that climate change remained on the agenda, but the war in Ukraine has raised fears that Europe may backslide on commitments to end fossil fuel funding as coal plants and gas plants are brought into commission to compensate for the Russian supplies.G7 countries must generate 42 per cent of their electricity by wind and solar by 2030 to keep global warming to 1.5C by 2050, the IEA has calculated. Pressure is building on Japan, which will assume the G7 presidency next, to take a lead role in commitments to cut coal use. Tokyo agreed at the recent G7’s energy and environment ministers meeting to stop financing fossil fuel projects internationally by the end of 2022 and promised to clean up its power system by 2035. This included supporting “an accelerated global unabated coal phaseout”.It is the only G7 country to have set a target falling short of the IEA’s recommendation of 42 per cent of energy from renewables, however, by setting itself a goal of 38 per cent.In 2020, 70 per cent of Japan’s electricity was generated from gas and coal, with just 20 per cent coming from renewables, according to energy think-tank Ember.“In the lead-up to the G7, many will ask if it is possible for Japan to achieve a 100 per cent clean energy system by 2035,” Ember said in a report last week. “While this target will be a challenge, it is achievable. The obvious place to start is scaling up rooftop solar and wind energy, which could help Japan create a far more secure and sustainable energy system by 2035.”The EU has set an average target of 63 per cent by 2030 for the generation of electricity from renewable sources.Among the leading bloc countries, Germany is aiming for 80 per cent by 2030, while Italy has a 70 per cent goal, and France just 38 per cent, because of its ample nuclear energy supplies that are regarded as “clean”. The UK has said it will generate 95 per cent of its electricity from low carbon sources by 2030, and the US has committed to 100 per cent clean power by 2035 but is lagging behind the G7 in current renewable generation.A US official told reporters in Washington this week that the subject of energy security would be “very much at the heart of discussions” at the G7 gathering. More

Stopping at the edge of a vast field of barley on his farm in Prundu, 30 miles outside Romania’s capital city of Bucharest, Catalin Corbea pinched off a spiky flowered head from a stalk, rolled it between his hands, and then popped a seed in his mouth and bit down.“Another 10 days to two weeks,” he said, explaining how much time was needed before the crop was ready for harvest.Mr. Corbea, a farmer for nearly three decades, has rarely been through a season like this one. The Russians’ bloody creep into Ukraine, a breadbasket for the world, has caused an upheaval in global grain markets. Coastal blockades have trapped millions of tons of wheat and corn inside Ukraine. With famine stalking Africa, the Middle East and elsewhere in Asia, a frenetic scramble for new suppliers and alternate shipping routes is underway.“Because of the war, there are opportunities for Romanian farmers this year,” Mr. Corbea said through a translator.The question is whether Romania will be able to take advantage of them by expanding its own agricultural sector while helping fill the food gap left by landlocked Ukraine.Catalin Corbea, in his trophy room showing stuffed animals from hunting expeditions, said the war in Ukraine had presented opportunities to Romanian farmers.Cristian Movila for The New York TimesIn many ways, Romania is well positioned. Its port in Constanta, on the western coast of the Black Sea, has provided a critical — although tiny — transit point for Ukrainian grain since the war began. Romania’s own farm output is dwarfed by Ukraine’s, but it is one of the largest grain exporters in the European Union. Last year, it sent 60 percent of its wheat abroad, mostly to Egypt and the rest of the Middle East. This year, the government has allocated 500 million euros ($527 million) to support farming and keep production up.Still, this Eastern European nation faces many challenges: Its farmers, while benefiting from higher prices, are dealing with spiraling costs of diesel, pesticides and fertilizer. Transportation infrastructure across the country and at its ports is neglected and outdated, slowing the transit of its own exports while also stymieing Romania’s efforts to help Ukraine do an end run around Russian blockades.Even before the war, though, the global food system was under stress. Covid-19 and related supply chain blockages had bumped up prices of fuel and fertilizer, while brutal dry spells and unseasonal floods had shrunk harvests.Since the war began, roughly two dozen countries, including India, have tried to bulk up their own food supplies by limiting exports, which in turn has exacerbated global shortages. This year, droughts in Europe, the United States, North Africa and the Horn of Africa have all taken additional tolls on harvests. In Italy, water has been rationed in the farm-producing Po Valley after river levels dropped enough to reveal a barge that had sunk in World War II.Rain was not as plentiful in Prundu as Mr. Corbea would have liked it to be, but the timing was opportune when it did come. He bent down and picked up a fistful of dark, moist soil and caressed it. “This is perfect land,” he said. “This is perfect land,” Mr. Corbea said after picking a handful of soil on his farm in Prundu.Cristian Movila for The New York TimesThunderstorms are in the forecast, but this morning, the seemingly endless bristles of barley flutter under a cloudless cerulean sky.The farm is a family affair, involving Mr. Corbea’s two sons and his brother. They farm 12,355 acres or so, growing rapeseed, corn, wheat, sunflowers and soy as well as barley. Across Romania, yields are not expected to match the record grain production of 29 million metric tons from 2021, but the crop outlook is still good, with plenty available to export.Mr. Corbea slips into the driver’s seat of a white Toyota Land Cruiser and drives through Prundu to visit the cornfields, which will be harvested in the fall. He has been mayor of this town of 3,500 for 14 years and waves to every passing car and pedestrian, including his mother, who is standing in front of her house as he cruises by. The trees and splashes of red-and-pink rose bushes that line every street were planted by and are cared for by Mr. Corbea and his workers.He said he employed 50 people and brought in €10 million a year in sales. In recent years, the farm has invested heavily in technology and irrigation.Amid rows of leafy green corn, a long center-pivot irrigation system is perched like a giant skeletal pterodactyl with its wings outstretched.Because of price rises and better production from the watering equipment he installed, Mr. Corbea said, he expected revenues to increase by €5 million, or 50 percent, in 2022.Investments like Mr. Corbea’s in irrigation and technology are considered crucial for Romania’s agricultural growth to reach its potential.Cristian Movila for The New York TimesThe costs of diesel, pesticides and fertilizer have doubled or tripled, but, at least for now, the prices that Mr. Corbea said he had been able to get for his grain had more than offset those increases.But prices are volatile, he said, and farmers have to make sure that future revenues will cover their investments over the longer term.The calculus has paid off for other large players in the sector. “Profits have increased, you cannot imagine, the biggest ever,” said Ghita Pinca, general manager at Agricover, an agribusiness company in Romania. There is enormous potential for further growth, he said, though it depends on more investment by farmers in irrigation systems, storage facilities and technology.Some smaller farmers like Chipaila Mircea have had a tougher time. Mr. Mircea grows barley, corn and wheat on 1,975 acres in Poarta Alba, about 150 miles from Prundu, near the southeastern tip of Romania and along the canal that links the Black Sea with the Danube River.Drier weather means his output will fall from last year. And with the soaring prices of fertilizer and fuel, he said, he expects his profits to drop as well. Ukrainian exporters have lowered their prices, which has put pressure on what he is selling.Mr. Mircea’s farm is about 15 miles from Constanta port. Normally a major grain and trade hub, the port connects landlocked central and southeastern European countries like Serbia, Hungary, Slovakia, Moldavia and Austria with central and East Asia and the Caucasus region. Last year the port handled 67.5 million tons of cargo, more than a third of it grain. Now, with Odesa’s port closed off, some Ukrainian exports are making their way through Constanta’s complex.Grain from Ukraine being unloaded from a train car in Constanta, a Romanian port on the Black Sea.Cristian Movila for The New York TimesRailway cars, stamped “Cereale” on their sides, spilled Ukrainian corn onto underground conveyor belts, sending up billowing dust clouds last week at the terminal operated by the American food giant Cargill. At a quay operated by COFCO, the largest food and agricultural processor in China, grain was being loaded onto a cargo ship from one of the enormous silos that lined its docks. At COFCO’s entry gate, trucks that displayed Ukraine’s distinctive blue-and-yellow-striped flag on their license plates waited for their cargoes of grain to be inspected before unloading.During a visit to Kyiv last week, Romania’s president, Klaus Iohannis, said that since the beginning of the invasion more than a million tons of Ukrainian grain had passed through Constanta to locations around the world.But logistical problems prevent more grain from making the journey. Ukraine’s rail gauges are wider than those elsewhere in Europe. Shipments have to be transferred at the border to Romanian trains, or each railway car has to be lifted off a Ukrainian undercarriage and wheels to one that can be used on Romanian tracks.Truck traffic in Ukraine has been slowed by backups at border crossings — sometimes lasting days — along with gas shortages and damaged roadways. Russia has targeted export routes, according to Britain’s defense ministry.Romania has its own transit issues. High-speed rail is rare, and the country lacks an extensive highway system. Constanta and the surrounding infrastructure, too, suffer from decades of underinvestment.Bins storing corn, wheat, sunflower seeds and soybeans in Boryspil, Ukraine.Nicole Tung for The New York TimesOver the past couple of months, the Romanian government has plowed money into clearing hundreds of rusted wagons from rail lines and refurbishing tracks that were abandoned when the Communist regime fell in 1989.Still, trucks entering and exiting the port from the highway must share a single-lane roadway. An attendant mans the gate, which has to be lifted for each vehicle.When the bulk of the Romanian harvest begins to arrive at the terminals in the next couple of weeks, the congestion will get significantly worse. Each day, 3,000 to 5,000 trucks will arrive, causing backups for miles on the highway that leads into Constanta, said Cristian Taranu, general manager at the terminals run by the Romanian port operator Umex.Mr. Mircea’s farm is less than a 30-minute drive from Constanta. But “during the busiest periods, my trucks are waiting two, three days” just to enter the port’s complex so they can unload, he said through a translator.That is one reason he is less sanguine than Mr. Corbea is about Romania’s ability to take advantage of farming and export opportunities.“Port Constanta is not prepared for such an opportunity,” Mr. Mircea said. “They don’t have the infrastructure.”Constanta is bracing for backups at its port when the bulk of Romania’s harvest starts arriving in the coming weeks.Cristian Movila for The New York Times More

The writer is editor-in-chief of Money WeekAre we nearly there yet? Global markets are over 20 per cent off their highs. And the past month has been particularly horrible. Even the longstanding defensive (and supposedly diverse) strategy of having 60 per cent of your assets in equities and 40 per cent in bonds has been something of a disaster — 60/40 is heading for the worst year since 2008 (when a standard 60/40 portfolio fell 20 per cent). The only hiding place has been China. Sadly, this level of misery does not mean there is not more misery to come. There may be a recession ahead. Bear markets don’t necessarily cause or come with recessions. The short, but nasty, bear markets of 1962, 1966, 1987 and 2018 did not, for example. However, a recession can make a bear market very significantly worse — or, at the very least, longer. Look at all the bears since 1902 in the US and you will see that those without a recession have lasted on average a mere 7.6 months. Those with a recession have lasted an average of 23.8 months — and that is with the generous inclusion of the super-short (one-month) bear market and state-enforced recession of 2020. This makes sense, of course. Bear markets are, in the main, reactions to overvaluation — a reversion to some kind of mean. If there is no recession — and hence no real change to the earnings part of the equation — a fall in prices back to a level at which price/earnings ratios look OK can be quick and simple. But add in a recession and all simplicity collapses. We can set prices when we have one moving part, but not when we have two. If you have been wondering why all market analysts are now obsessed with the possibility of a recession and how long it might last, this is why. Figuring out the answer is a matter of establishing first where inflation will go, and second how central bankers will react to where inflation has gone. Most analysts are looking to commodity prices — the supply crunch that has driven this year’s horrible consumer price index numbers — for the answers. Here there might be glimmers of good news. The oil price has turned down slightly and the copper price (one of the most watched numbers in the market) has just hit a 16-month low (it is down 14 per cent this year so far). Mining stocks are falling too. This suggests the tantalising possibility that we may be near peak inflation. If that is so, then it might not be that long until central banks can pull back from raising interest rates, today’s scary anti-Goldilocks environment (everything is either too hot or too cold) will evaporate and all will be well again. If central banks get the balance right — unlikely, I admit — we could end up seeing exactly what everyone wants: a soft landing that comes with either no growth for a few quarters or a very mild recession. Job done. There is, however, an inflationary wild card here: wages. Listen to the news occasionally and you might conclude that real wages everywhere have been collapsing. But that is not quite right. As market historian Russell Napier points out, by the end of April 2022, UK wages were 13.9 per cent above their pre-Covid level. Consumer price inflation had risen only 9.2 per cent. In the past few months, inflation has hit new and nasty highs. But there is good reason to think that wages will catch up soon. The labour market in the UK remains very tight (as is the case in the US, where real wages are also up since the beginning of the pandemic). And while union membership in the UK has halved from its peak in 1979, it is rising again. A summer of industrial action is already under way in the UK, as anyone hoping for an easy train ride to the first Glastonbury music festival in three years will know. And anyone planning to go on holiday over the summer will be increasingly worried, given that British Airways employees have just voted to strike. There is, says Napier, “a bull market in the price of labour”. That is not necessarily bad news at all. In fact, you could see it as a welcome development. It makes a long, deep recession less likely. Note that even in the grim consumer confidence numbers released in the UK this week, purchasing intentions remained unchanged. And, given that central banks, the US Federal Reserve in particular, appear to be more focused on the wellbeing of Main Street than that of Wall Street at the moment, pay may be an inflation driver that worries them less than others. Where wage growth might hurt, however, is in profit margins. Look at company earnings forecasts and you will see that not much misery has been priced in. Current estimates suggest that UK companies will report earnings per share 4 per cent above 2019 levels this year and that US and European companies will see EPS up 38 per cent and 24 per cent respectively, notes Simon French of Panmure Gordon. A summer of strikes and real wage rises could turn that around pretty quickly, recession or no recession. We might be nearly there. It is just that our destination may not be the one we were expecting. More

After a long pandemic-led interruption, cruise operators had seen demand bounce back recently but sky-high prices of essentials like food and gas have made consumers mindful of their spending as fears of a recession looms in the United States.The cruise operator’s revenue rose to $2.40 billion in the second quarter from $50 million a year earlier, missing analysts’ average estimate of $2.77 billion, according to IBES data from Refinitiv.The company’s net loss narrowed $1.83 billion, or $1.61 per share, in the quarter ended May 31, from $2.07 billion, or $1.83 per share, a year earlier.Shares of Carnival (NYSE:CCL) rose 2% in premarket trade. More

(Reuters) -Wall Street’s main indexes were set to open higher on Friday as signs of slowing economic growth and falling commodity prices eased expectations over how aggressively the Federal Reserve will raise interest rates to rein in inflation.Global financial markets have been roiled this month on worries that rapid rate hikes by major central banks could cause a sharp economic downturn, with the benchmark S&P 500 confirming a bear market last week as it recorded a 20% drop from its January closing peak.Data on Thursday showed U.S. business activity slowed considerably in June, driving investors to scale back bets on where interest rates may peak. Sliding commodity prices also quelled worries about red-hot inflation, with copper prices heading for their biggest weekly fall in a year and crude oil set for a second weekly decline.”Conversations about the U.S economy likely slowing which could lessen the hawkishness of the Fed, combined with lower commodity prices and bond yields – these are reasons investors are mentioning to justify why we could experience a near-term bounce,” said Sam Stovall, chief investment strategist at CFRA Research in New York.”Yet, I do not think that it’s the final bottom.”The Fed’s commitment to fight high inflation is “unconditional,” Chair Jerome Powell told lawmakers on Thursday, a day after saying it was not trying to provoke a recession but that was “certainly a possibility.” The main stock indexes looked set to notch their first weekly gain in four, with healthcare, real estate and utilities – among sectors considered as safer bets during times of economic uncertainty – outperforming so far in the week. Market heavyweights such as Apple Inc (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) rose 0.9% and 0.5% in premarket trading. Rising interest rates have hurt shares of the mega-cap growth companies as their valuations rely more heavily on future earnings.At 08:45 a.m. ET, Dow e-minis were up 208 points, or 0.68%, S&P 500 e-minis were up 27.5 points, or 0.72%, and Nasdaq 100 e-minis were up 90.25 points, or 0.77%.The University of Michigan’s survey on U.S. consumer sentiment in June and new home sales data will be published later in the day. FedEx Corp (NYSE:FDX) rose 3.4% after the parcel delivery company issued a stronger-than-expected full-year profit forecast despite softening global demand for shipping.Bank stocks were mixed after the Federal Reserve’s annual “stress test” exercise showed that the lenders have enough capital to weather a severe economic downturn. Citigroup Inc (NYSE:C) slipped 0.9% and Bank of America Corp (NYSE:BAC) edged lower, while Morgan Stanley (NYSE:MS) gained 1%.Zendesk (NYSE:ZEN) Inc soared 28.1% after the software company said it would be acquired by a group of buyout firms led by Hellman & Friedman LLC and Permira in a deal valued at $10.2 billion. More

“We have to act forthrightly and aggressively to get inflation to turn around and get it under control … or you could suffer a decade of high and variable inflation,” Bullard said during a panel discussion on central banks and inflation hosted by UBS in Zurich, Switzerland.”So front-load today, get inflation under control in short order and get inflation back on a path to 2%,” Bullard added.Last week, the Fed raised its benchmark overnight interest rate by three-quarters of a percentage point – its biggest hike since 1994 – to a range of 1.50% to 1.75%, and signaled its policy rate would rise to 3.4% by the end of this year.Bullard has previously said he wants to see the Fed’s policy rate increase to 3.5% by the end of 2022, a point he repeated on Friday. Once borrowing costs rise high enough to put downward pressure on inflation and disinflationary forces take hold, the central bank could possibly begin to cut rates, he said.The St. Louis Fed chief also downplayed the risk of recession, saying that rate increases will probably slow the economy to a trend pace of growth, rather than below trend.”This is the early stages of a U.S. expansion … unless we get hit by a bit shock or something, it would be unusual to go back into recession at this stage,” Bullard said.On Thursday, Fed Chair Jerome Powell told lawmakers the central bank’s commitment to reining in inflation, which is running at a 40-year high, is “unconditional.” More

LONDON (Reuters) – The fastest rate-hiking cycle in decades and inflation nearing double-digits has got investors scouring market moves and data to gauge whether the world economy is headed for recession.Business activity is slowing, many stock indexes are in “bear” territory, while higher borrowing costs are squeezing corporate and consumer spending. The U.S. Federal Reserve last week upped interest rates by 75 basis points, its biggest single rate hike since 1994, and has signalled its commitment to containing price pressures even if it brings about a growth downturn.”Inflation is still rising and that means the Fed will hike more and move more rapidly, which will put downward pressure on the economy, so that’s adding to recession fears,” said Seema Shah, chief strategist at Principle Global Investors. “There are also growing signs of economic weakness coming earlier than expected.”The World Bank currently expects 2022 global growth at 2.9%. Here is what some closely-watched indicators are saying about recession risks.1/ OLD FAVOURITE The U.S. Treasury yield curve has a track record of predicting recessions, especially when two-year yields rise above 10-year maturities. At around 5 basis points (bps), the spread between the two segments has flitted in and out of negative territory recently, so recession watchers are paying attention.The U.S. bond yield curve https://fingfx.thomsonreuters.com/gfx/mkt/movanryqnpa/recession2406.PNGThe concern is that the Fed, facing 8%-plus inflation, will take monetary policy into what economists call restrictive territory, slowing economic activity. “Chances the Fed can land on that narrow strip of safe ground are very remote,” Mizuho senior economist Colin Asher said.Money markets, having slashed bets on how high the Fed will take interest rates, now expect rates to fall about 20 bps between April and July 2023.2/ PMI PROBLEMSPurchasing Managers’ Indexes (PMI) are reliable predictors of manufacturing, services, goods inventories, new orders, and therefore future growth.A global composite PMI index from JPMorgan (NYSE:JPM) was the weakest since July 2020 in May, with the new orders component only just above the 50 level dividing activity expansion from contraction. PMI https://fingfx.thomsonreuters.com/gfx/mkt/movanrwgjpa/Pasted%20image%201656002596986.pngU.S. PMIs too have fallen, with manufacturing decelerating sharply in June. Sub-50 readings coincided with recessions in 2008 and 2020. “Global PMIs sliding towards 50 is another sign that the post-COVID boom is behind us,” Mizuho’s Asher said. US PMI https://fingfx.thomsonreuters.com/gfx/mkt/zdvxoeqznpx/Pasted%20image%201656004378870.png3/ COUNTING COMMODITIES Copper, a well-known growth bellwether, has slid 7% this week – its sharpest weekly drop since the March 2020 meltdown.Dubbed “Dr Copper” because of its record as a boom-bust indicator, the metal has also seen its price ratio to gold hit an 18-month low. In short, if you think the economy’s tanking, dump copper and buy gold.Brent crude has also slid 10% in June and is set for its biggest monthly fall since November. copper-gold https://fingfx.thomsonreuters.com/gfx/mkt/gdvzygnmdpw/Pasted%20image%201656054034298.png4/CARING ABOUT JUNK Corporate sector stress, especially at the lower end of the credit spectrum, is another warning signal.Financing costs for sub-investment grade, or “junk” U.S. companies have almost doubled this year to 8.51%. In euro markets, yields have soared to 6.8% from 2.8%.According to BofA, if recession becomes a consensus view, U.S. junk bonds’ risk premia would average 600-650 bps, and peak above 700 bps. At current spreads around 500 bps, the index “is about 70% on our way to pricing in a certainty of a recessionary outcome”, BofA analysts wrote. Spreads on bonds rated triple-C and lower – facing the highest default risk – have risen above 1,000 bps, a significant sign of stress. U.S. junk bond spreads https://fingfx.thomsonreuters.com/gfx/mkt/xmpjowjjdvr/junk%20bonds%20june%2024.png5/ SHIFTING CONSENSUS Several big banks are flagging increased likelihood of recession.Goldman Sachs (NYSE:GS) forecasts a 30% chance of the U.S. economy tipping into recession over the next year – versus 15% earlier – while Morgan Stanley (NYSE:MS) places U.S. recession odds for the next 12 months at around 35%.Citi forecasts a near-50% probability of global recession.Citi’s Economic Surprise Index, measuring the degree to which the data is beating or missing forecasts, has fallen sharply for both Europe and the United States. US, euro area surprise index is pointing sharply lower https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnxwwwpq/SURPRISEINDEX.PNG More

BRUSSELS (Reuters) -EU leaders met on Friday to prepare for further cuts in Russian gas, limit the impact on inflation and seek alternative supplies, accusing Moscow of “weaponising” energy via a supply squeeze that Germany warned could partly shut its industry.A day after celebrations over setting Kyiv on the road to membership of the bloc, Friday’s summit in Brussels was a sober reflection on the economic impact of Russia’s invasion of Ukraine.”The notion of cheap energy is gone and the notion of Russian energy is essentially gone and we are all in the process of securing alternate sources,” Latvian Prime Minister Krisjanis Karins said, adding governments must “support those portions of society that suffer the most”.Leaders of the 27 EU nations will, according to a draft summit statement seen by Reuters, place the blame for a huge spike in prices and sagging global growth on the war that began exactly four months ago.Following unprecedented Western sanctions imposed over the invasion, a dozen European countries have so far been thumped by cuts in gas flows from Russia.”It is only a matter of time before the Russians close down all gas shipments,” said one EU official ahead of Friday’s talks.German Economy Minister Robert Habeck warned his country was heading for a gas shortage if Russian supplies remained as low as currently, and some industries would have to close come winter.”Companies would have to stop production, lay off their workers, supply chains would collapse, people would go into debt to pay their heating bills,” he told Der Spiegel magazine, adding it was part of Russian President Vladimir Putin’s strategy to divide the country.The EU relied on Russia for as much as 40% of its gas needs before the war – rising to 55% for Germany – leaving a huge gap to fill in an already tight global gas market.’WEAPONISATION OF GAS’Inflation was the main concern in morning talks among leaders on the EU’s economic situation, but there were also positive comments about growth and the summer tourism season, an EU official said.Inflation in the 19 countries sharing the euro currency has shot to all-time highs above 8% and the EU’s executive expects growth to dip to 2.7% this year.Eurogroup chief Paschal Donohoe warned that the bloc must “acknowledge the risk we could face if inflation becomes embedded in our economies”.According to a draft statement seen by Reuters, EU leaders will say that “in the face of the weaponisation of gas by Russia”, the European Commission should find ways to secure “supply at affordable prices”.”We need to start buying energy collectively, we need to implement price caps and we need to make plans together to get through the winter,” Belgian Prime Minister Alexander De Croo said on Friday as he arrived at the summit.”If we don’t pay attention then the whole EU economy will go into a recession with all its consequences.”The bloc responded to the war with uncharacteristic speed and unity, but some sanctions, such as a planned embargo on Russian oil imports, have repercussions for its economies.EU countries have already poured billions of euros into tax cuts and subsidies to combat surging energy prices.But that adds up to hefty bills for already stretched coffers, leaving many scrambling to find a solution, and EU countries disagree on a bloc-wide solution to address soaring prices.Spain and Portugal capped gas prices in their local electricity market this month, but other states warn price caps would disrupt energy markets and drain state coffers further, if governments had to pay the difference between the capped price and the price in international gas markets. More