Recession: Citigroup issues ominous warning as European economy slumps | World | New

Financial sanctions against Russia have driven energy prices to unprecedented levels, which, alongside the effects of the pandemic, has left Europeans facing a cost of living crisis. Experts warn that the situation will only get worse, with the devastating impact of a recession hitting European countries.

Jane Fraser, CEO of Citigroup, said Europe is “definitely” heading into a recession, which will leave people unable to cover necessary heating costs this winter.

She said: “A big concern will be the cost of heating in the winter.

“There is some confidence if it’s not a bad winter the European energy industry probably has enough supplies to get through.

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“But if it’s a cold winter or if there are other droughts impacting some of the more sustainable energy sources, that’s going to be a problem.”

As the West prepares to phase out energy imports from Russia in response to the atrocities of the war in Ukraine, Ms Fraser said concern over Russian gas is “an extreme risk that exists”.

The bank’s chief noted, “I think the consumer is going to be hammered by the cost of energy and inflation.”

As the world struggles to recover from the highly damaging impact of the pandemic on the global economy, Ms Fraser was asked to compare the risk of a recession in Europe with that in the United States.

In response, she explained that the US banking system has more flexibility than the European system and that the European Central Bank fails to manage inflation.

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The Citi CEO said, “It looks like the ECB is a few months behind what the US has done to get inflation under control, and without quite the same flexibility as the US.”

Comparing the handling of the crisis in Europe and Asia, Ms Fraser predicted that Europe would face a “tougher time” as Asian supply chains are more “recovery oriented”.

As for Citigroup, she highlighted its broad international reach as the most important feature.

She said customers liked the global setup because the bank is rooted locally and would not just consist of a bunch of people who just flew in.