Economist: Elsmockan can delay recovery after the pandemic

Winter is approaching, and electricity prices continue to soar.

Senior economist Daniel Kral at the research company Oxford Economics describes the electricity crisis as a perfect storm.

High demand is pushing up prices while we are on our way out of the pandemic.

Abolished restrictions and cold temperatures indicate that prices will continue to rise, says Thina Saltvedt, energy expert at Nordea.

- The colder it gets, the more energy we consume.

When society opens up, economic activity increases and energy consumption is often very closely linked to economic activity, says Thina Saltvedt at Ekonomibyrån.

High electricity bills are a severe blow to low-income earners who are already struggling with the economy.

But most households can afford more expensive electricity according to Daniel Kral, who believes that high electricity bills in themselves are not the main reason to worry. 

- Everyone expects consumers to lead the recovery when we emerge from the pandemic.

But with higher electricity prices, there is a risk that you refrain from restaurant visits and entertainment or postpone large purchases, to ensure that you can pay the bills, says Daniel Kral. 

- Now comes this bang and it can really delay the recovery.

No emergency

At the macroeconomic level, it is important to put the crisis in perspective, says Daniel Kral.

- When the pandemic struck, the economies in Europe fell by up to 20 percent.

The electricity crisis may dampen growth by a few percent in the months that follow.

In terms of how governments and the European Commission reason, there is no feeling that we are in any emergency, according to Kral.

A basic assumption is that the crisis is largely temporary, and that prices will fall again in the spring.

- Even if electricity prices push up inflation right now, it will decrease towards the middle of next year.

Do not miss the whole episode of Ekonomibyrån, Elchockad in SVT Play.