BAKU, Azerbaijan, June 14. Taking into account the different exposures of the European companies to electricity costs it is expected that their electricity bills will double, Trend reports via the European Investment Bank (EIB).
As the EIB report forecasts, the EU firms may earn less this year due to the increase in energy prices. Across the EU countries, energy prices have increased by 80 percent on average. However, they vary among the EU’s economies.
“The European Union is a major importer of Russian oil and gas. In October 2021, limits placed on Russian energy exports fueled energy price inflation and therefore overall inflation. The increase in energy prices has prompted EU members to put in place measures to shield households and/or firms from the direct impact of rising prices. The measures taken include a combination of lump-sum payments, tax reductions, energy subsidies, and caps on energy price increases. Only some of these measures include incentives for the green transition, such as lump-sum payments,” the report said.
Thus, the EIB assumes that the EU firms' energy costs will double and that the increased value is fully absorbed by the profit without any change in sales prices.
Moreover, “an adverse shock leads to a decrease in the added value of companies by 6 percent. The reaction varies by sector, with price increases hitting the most energy-intensive sectors the hardest. For example, value-added is reduced by 15 percent in the chemical sector. Given the diversity of the EU economies, the consequences of the same shock in the field of energy are not the same across different countries,” the report noted.
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