The sharp increases in gas and electricity prices in Europe mean that households there – particularly in Germany and Italy – will see a steep rise in their costs of energy consumption. Accordingly, governments have announced support packages worth 1.5% to 7% of GDP. But more stimulus means that monetary policy will need to be tightened even more aggressively. On the other hand, households in the US and Canada will be no worse off than pre-pandemic, giving central banks scope to loosen policy next year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services