The energy crisis that has hit Germany and other European Union nations since the Russian invasion of Ukraine is now reportedly threatening to put many industries in danger of financial collapse.
German Federation of Trade Unions leader Yasmin Fahimi told reporters on Sunday that natural gas supply bottlenecks are placing “entire industries” including aluminum, glass, and chemicals, in “danger of permanently collapsing.”
Russia reduced its supply of natural gas to Europe through the Nordstream pipeline by 60%, claiming a structural disruption required the lowered shipments. German industries are especially reliant on a stable supply of cheap natural gas from Russia, and their production costs are skyrocketing and delays are mounting.
Fahimi added that collapses across entire industries would have “massive consequences” for the country’s entire economy.
Germany’s Economics Minister Robert Habeck told reporters on Saturday that the government is looking for solutions to increased energy costs that are hammering commercial facilities and households. The warnings have been ongoing for weeks as Germany has braced for reduced gas supplies.
Habeck also said that the energy crisis could become a catalyst for a financial collapse along the lines of the Lehman Brothers crisis that arose in 2008.
Deutsche Bank financial strategist George Saravelos issued a warning to his clients recently because of the natural gas supply crunch. He noted that lower supplies are leading to surging electricity and utility costs that threaten to cripple domestic production.
Over the last week, stock values of the German gas and electricity provider Uniper have crashed. The company has been restricted to only 40% of its natural gas needs being supplied by Russia. It has had to purchase the rest on the open market where prices are skyrocketing. It is now reportedly losing nearly $30 million per day.
Saravelos also cautioned that if the Nordstream supply problems are not cleared up soon, price inflation in Germany is likely to soar even higher.
Germany and other Western European nations are unfortunately likely to continue to face negative results because they supported the Ukraine war effort without having a reasonable back-up plan in place to replace lost supply from a vindictive and unpredictable Russian regime.