Cold winter could spark social unrest in Europe, warns IMF chief

EUROPE could face social unrest if there is a cold winter, the head of the International Monetary Fund (IMF) has suggested, as Brussels prepares a €140bn (£121bn) raid on the energy industry to help solve the crisis.

Kristalina Georgieva, managing director of the International Monetary Fund, raised the spectre of unrest in Europe if it proves to be a particularly “harsh” winter.

“There is certainly fear of recession in some countries, or even if it is not recession, that it would feel like recession this winter,” she said. “If Mother Nature decides not to cooperate, and the winter is actually harsh, that could lead to some social unrest.”

Ms Georgieva said the European Central Bank needed to be “mindful of the necessity to keep the economy going” while also fighting inflation.

The EU yesterday unveiled a plan to cap power producers’ revenue and raid oil and gas producers’ profits. Ursula von der Leyen, president of the European Commission, said it was “wrong” for companies to be making record profits amid energy shortages due to Russia’s war on Ukraine, and the money should be shared.

She set out plans to cap the sales of energy from nuclear power stations, wind and solar farms at €180 per MWH, well below half current prices, and to tax oil, gas, coal and refining firms 33pc of their surplus profit. The Commission is also putting forward a target for countries to cut electricity use by 5pc, to try to save electricity and gas.

Cuts to Russian gas supplies to Europe since it invaded Ukraine have thrown energy markets into disarray, triggering a cost of living crisis in Europe and the UK and forcing some heavy industry to shut production. Figures from Eurostat yesterday showed industrial production fell by 2.3pc in the eurozone and 1.6pc in the EU between June and July. The biggest decreases were in Ireland and Estonia.

The energy shortages have been worsened by outages within France’s nuclear fleet as well as low hydropower reservoirs.

“In these times, profits must be shared and channelled to those who need it most,” Ms Von der Leyen told the European Parliament in Strasbourg.

Member states will be able to use the funds raised to help households and businesses through the crisis.

Several European governments have put in place steps to shield consumers from rising bills. France yesterday said power and gas price increases would be capped at 15pc next year, after it kept gas prices frozen and limited electricity price rises to 4pc this year.

In the UK, the Government is stepping in to cap energy bills at an average of £2,500, which is still almost double the average level last October.