Economic stagnation on the continent is not inevitable
The warm winter saved Europe from the dangerous repercussions of the energy crisis
Europeans are not used to being warm in winter.
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The unusual heat came at a time when Europe needed energy.
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Visitors to Warsaw (the capital of Poland) at this time of the year tend not to enjoy the sun in temperatures approaching 20 degrees Celsius.
And Bilbao, located in northern Spain, is usually very cold, not tropical, in January.
But in this strange winter;
Record seasonal temperatures are being recorded across Europe, and in turn, unexpectedly, energy prices are falling. The price of natural gas in the main hub of the continent has fallen to levels last seen before the war in Ukraine.
The warm fall delayed the heating season, allowing gas storage facilities to fill up.
The current warmth has made it possible to preserve gas reserves, which is a stunning mid-winter turnaround.
Finally, Europe has consumed half as much gas from storage facilities as it has at this point in the past two winters;
Forecasts point to a mild end to winter.
The good weather is not the only reason for joy, as the gas supply is increasing as the new LNG terminals come online.
Wet autumns and windy winters helped drive hydro and wind power generators.
French nuclear plants, which have been shut down for maintenance, are gradually returning to the grid.
"The stresses that caused the energy crisis in 2022 are all easing at the same time," notes Leon Hirth of Hertie College in Berlin.
Energy prices in Europe have fallen back to levels last seen before the summer.
This provides the continent with an economic boost.
Sentiment indicators rose in Europe for two months in a row.
In defiance of the bleak outlook, German industrial production continues to resilient.
Unemployment remains at its lowest levels across Europe, and companies plan to hire more workers, rather than lay off workers.
Experts tend to raise growth expectations;
Goldman Sachs no longer sees the eurozone slipping into recession in 2023. In a flashback to the Middle Ages, a change in weather has changed Europe's economic fortunes.
However, it is still too early to declare an end to the energy crisis.
Prices remain much higher than usual, with overall energy prices almost double what they were in mid-2021. The same gas, which costs about €75 per megawatt, was sold for €10 before the pandemic.
Gas demand from industry is likely to rise;
Gas-fired power plants may begin to replace coal-fired plants.
Even with storage facilities full, according to the International Energy Agency, Europe still lacks enough gas for a bad winter next year.
Meanwhile, demand for gas is growing in Asia, and will continue to rise as the Chinese economy returns to normal.
Tamira Energy, a consulting firm, also notes that the gas market is still operating on the edge of supply capacity, which means sharp price movements are still possible.
Still, Europe will be fine, and leaders can use the opportunity to rethink the many support schemes they introduced over the summer, many of which are costly, ineffective, and untargeted.
It would be wise to focus support on the vulnerable, and link funds to sustainable investments.
After all, it was the strangely hot weather that gave Europe the running respite.
The fight against climate change will become more acute as the energy crisis fades.
• The current warmth has made it possible to preserve gas reserves in Europe, which is a stunning turn in the middle of winter.
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