While they are at the heart of the cloud revolution currently unleashing the potential of the internet, data centers are also notorious climate polluters. The sector has received immense scrutiny for years due to its resource-gobbling operations and significant concerns over the ecological impact it has on local communities.

However, a recent report by McKinsey suggests that data center operations, at least in on-premises applications, may be a smaller concern relative to the substantial emissions from enterprise technology.

According to the report, corporate devices flood the earth’s climate with about 400 megatons of carbon dioxide equivalent gases. Overall, enterprise tech emissions total roughly 1% of global greenhouse gas emissions – or, to put this in context, the equivalent of the United Kingdom’s total carbon emissions.

I think that with the increasing pressure on companies and large corporations for more substantial action on climate and sustainability issues, the McKinsey report could hardly have come at a worse time. Nevertheless, the data holds an advantage for companies willing to put in the work on climate issues. As McKinsey note, “progress on climate change requires action on many fronts, and enterprise technology offers an important option that CIOs and companies can act on quickly.” I’ll look a bit more closely at this data below and the implications it raises.

Corporate devices are nearly twice as polluting as data centers

End-user devices such as smartphones, laptops, printers, and tablets are the biggest culprit in enterprise tech emissions. Altogether, they emit between 1.5 and 2.0 times more carbon than data centers. There are a few reasons why this is the case.

First, corporate end-user devices are significantly more – and proliferate much quicker – than the servers in on-premises data centers. Employment booms, which have occurred often recently, typically cause device numbers to balloon, often on a one-to-one basis. Meanwhile, companies usually purchase servers and provision data centers based on forecasts of current and near-future use, and therefore need to upscale infrequently.

Second, end-user devices have a shorter refresh cycle than on-premises servers. For instance, smartphones typically get replaced in two years, while laptops and printers have refresh cycles of four and five years respectively. Meanwhile, servers get replaced every five years on average – and one in five companies wait even longer.

Third, and perhaps more importantly, emissions from corporate end-user devices are set to increase over the coming years at a CAGR of 12.8% yearly. This projected rise is driven by growing emissions from manufacturing, transportation, use, and disposal of these devices.

Consequently, taking action on enterprise end-user devices can be an effective way to quickly and sustainably slash corporate emissions. Some levers that companies may adopt include using energy-efficient devices, limiting the proliferation of these devices, exploring refurbished devices, and increasing product life span.

McKinsey also suggests that migrating from on-premises servers to “hyperscale” cloud-hosted computing may present one of the biggest emissions savings opportunities for companies. But can this provide the climate progress that companies need to establish their sustainability credentials?

The “carbonivorous” data center controversy

While the drive towards sustainability through “hyperscale” data centers may yet bear fruit, the data center controversy continues to receive significant attention. According to figures quoted in the MIT Press Reader, the cloud now has a greater climate footprint than the aviation industry. Starkly put, “a single data center can consume the equivalent electricity of 50,000 homes.”

And what is perhaps most frustrating is that the substantial portion of this energy use does not even go to active computational processes – those take up only 6-12% – but instead to redundancies stacked upon redundancies needed to guarantee the now minimum 99% uptime required by cloud users.

Hopefully, moving to hyperscale data centers will markedly reduce the resource requirements of cloud computing. But only time will tell whether that will be the case.

A Bedford-based company has made history after signing a deal to produce and deliver ten 100-passenger helium airships. The deal, concluded between Hybrid Air Vehicles (HAV) and Spanish airline AV Nostrum, is expected to create 1,800 jobs in South Yorkshire and contribute to the UK’s sustainability goals.

The Airlander 10 airships will be built at a recently constructed green manufacturing cluster in South Yorkshire and are expected to provide an employment and financial boost to the local economy.

Beyond this, the Airlander 10, which HAV says will have less than a tenth of the carbon footprint per passenger of a traditional jet plane, represents a leap forward in the race towards a cleaner and more climate-friendly aviation industry.

Responsible for roughly 3% of global emissions, the aviation industry has long been a target for a green revolution. But climate-friendly air travel has remained largely within the realms of experimentation, until now. While various options including clean aviation fuel, electric planes, and direct capture devices have all received varying levels of consideration, the industry had shown little promise of a viable and scalable option that could drastically cut C02 emissions.

However, HAV’s futuristic Airlander 10 airships can potentially move the needle on climate progress within the industry. Acknowledging the progress that the company’s deal with AV Nostrum represents, UK business secretary Kwasi Kwarteng said, “hybrid aircraft could play an important role as we transition to cleaner forms of aviation, and it is wonderful to see the UK right at the forefront of the technology’s development.”

Kwarteng also noted that the local jobs being created by the deal was just as satisfying. “It is more proof of how the UK’s businesses are embracing new technology to drive growth and support high skilled UK jobs.”

The promise of helium airships

There are many promising aspects to the Airlander 10 deal, but I believe industry players would be most interested by the multiple applications to which the aircraft may be put. HAV initially designed its airship as a surveillance and reconnaissance vehicle during intelligence missions in Afghanistan since it is less noisy than a helicopter and can stay in the air far longer. But it also has interesting applications in commercial travel.

With a 400km range and a rigid body that can land or lift off from any surface, the craft does not need a runway or pressurized cabins. Therefore, airship stations can be more space-efficient, while the aircraft itself can provide more windows and cabin space for passengers. According to Rebecca Zeitlin Head of Marketing and Communications at HAV, the Airlander 10 presents a more enjoyable, and potentially more luxurious, passenger experience. She says that “every seat will be a little bit like a business class experience. The whole experience will be more restful.”

Helium airships can also make an impact in disaster relief operations, such as combatting wildfires and effecting evacuations during emergency situations like tsunamis, flooding, industrial accidents, and earthquakes. The craft can carry more than 200 people per trip and potentially delivers four times the amount of water – up to 300 tons per day – traditional firefighting planes carry.

I think there’s a lot to anticipate from the blossoming rigid airship industry in the coming years. It would be to see how the aircraft performs in real life situations, and with AV Nostrum set to take delivery of its Airlander 10 airships by 2026, we may not have long to wait before we get to see them in action.

Amid sharply rising global energy and food prices, inflation has threatened to spiral out of control worldwide, and this is prompting concerted action from major central banks. With inflation hitting multi-decade highs in most economies, central banks are responding by hiking interest rates at a similarly record-breaking pace.

For instance, the Bank of England recently effected its largest rate increase in 27 years, and the previously “dovish” European Central Bank raised interest rates for the first time in 11 years, bidding farewell to a “long chapter of negative rates.”

However, despite the increased synchronicity of central bank measures worldwide, there continue to be outliers. Japan, for instance, has chosen not to implement a rate hike – instead, the country is focused on protecting its currency against a surging dollar. Likewise, even in countries where interest rates have risen, central banks have acted uniquely and with varying levels of urgency. Below, I take a closer look at how major banks in different regions are responding to inflationary pressures below, why they’re raising rates, and what they’re doing differently.

Rising interest rates

Inflation has been a key topic in economic discourse since mid-2021. Even before the cost-pushing trends caused by the conflict in Ukraine, there were strong signals that central banks would shortly act to reverse the quantitative easing measures implemented to prop economies up against COVID.

Now, with record inflation rates, banks are acting to put the brakes on and prevent entrenched inflationary pressures. By raising interest rates, they increase the cost of borrowing and this in turn reduces the purchasing power of consumers. With less purchasing power, demand for many goods and services should fall, ultimately resulting in lower prices.

As the IMF notes, central banks in emerging markets were the first to start hiking rates in 2021, before being followed by their counterparts in advanced countries. In a roundup of recent rate increases, Reuters reporting indicates that the US lifted rates by 75 bps on September 21 – and projections indicate more planned hikes, potentially bumping rates up to 4.4% by year-end.

The Bank of Canada has also aggressively tightened monetary policy, raising its policy rate to 3.25% – including a 100 bps raise at one point. There are further plans to raise policy rate by 50 bps to 3.75% in October. Meanwhile, the Bank of England has taken a more measured approach, delivering a 50 bps hike on September 22 – less than the 75 bps expected in the market. Nevertheless, money markets see sharper rate hikes on the horizon, with projections of a policy rate of 4.9% by June 2023.

Norway was the first major economy to start hiking rates in 2021, and on September 22 another 50 bps increase brought the country’s policy rate to 2.25%. Likewise, the Reserve Bank of Australia hiked rates for the fifth month in a row, delivering a seven-year high 2.35% policy rate.

Rate hiking action has been slower elsewhere, with Switzerland and the EU playing catch up. The Swiss National Bank only entered positive rates in September, with a 75 bps hike to 0.5% in its second rate increase this cycle. Similarly, the European Central Bank implemented a 75 bps hike in September, raising deposit rates to 0.75% while refinancing rates were up to 1.25% in the highest increase since 2011. Further hikes are likely, with the ECB signaling that rate rises may well continue into 2023.

Recession fears and deflation concerns

While conventional wisdom suggests that targeted rate hikes can help control inflation, central banks are wary of overshooting their inflation targets. As Euronews notes, “aggressive monetary policy is a tightrope walk: making money more expensive can slow down growth, weaken salaries, and foster unemployment.”

In a survey conducted in November 2020, McKinsey & Co. found that roughly 80% of European small and medium-sized enterprises (SMEs) viewed their economy as “somewhat to extremely weak”. While the sentiment varied across national economies, SMEs in Italy and Spain were the least optimistic, while Germany had the most optimistic.

Nearly two years later, many of the challenges that informed this SME stance are still unresolved or have worsened in some instances. Businesses across the EU continue to experience difficulties owing to congested supply chains, rising energy costs, and stretched finances.

Likewise, the industries most affected by the pandemic, including hospitality, cultural, creative, food and drinks – which account for a majority of SMEs – are still on a sluggish path to recovery.

Commentators in some quarters suggest that regulatory bodies, such as the European Commission, are not doing enough to help EU SMEs survive and thrive.

Small businesses badly hit in Europe

I doubt that anyone can deny the overwhelming and far-reaching effects of the COVID-19 pandemic, especially in the SME sector. For a sector that is mostly labor-intensive and dependent on liquidity generated from a steady cadence of demand and supply, the SME sector was amongst the least prepared for the pandemic. Their higher focus on physical selling, coupled with the low rates of digitalization in the sector, meant that when COVID hit, it hit hardest for small companies, including those in Europe.

Explaining why this was the case, Anna Fusari, the European Investment Bank’s head of Banks and Corporates division in the Adriatic Sea region, noted the “thinner liquidity reserves” that SMEs often have. Additionally, “they have limited financial alternatives, and they mostly rely on support from local banks,” says Fusari. “In the majority of cases they lack assets that can be disposed of, or that can be used as collateral for new credit lines.”

While the EU swung into action in passing comprehensive financial and economic measures to broadly support businesses, including SMEs, the situation remains challenging for these companies.

Further, as Christine Lagarde, head of the European Central Bank, admitted in a 2021 speech at the “Jahresimpuls Mittelstand 2021” in Frankfurt, “[the] reality is currently hard for many [SME] firms and the future remains uncertain.”

Yet, this was before the crippling supply chain squeezes recorded from mid-2021 and the energy crisis that has plagued households and businesses since then. Since then, business has gotten much tougher for SMEs who have to contend with runaway business costs while demand has remained static or below pre-pandemic levels in the sectors hardest hit in 2020.

What does the future hold for EU SMEs?

SMEs are a critical component of any economy, particularly in the EU where they contribute 66.6% of jobs and 56.4% of total added value. As I see it, the EU must act with even greater commitment to ensure micro, small, and medium companies in the region experience relief from the highly volatile and uncertain business environment they have endured for the past two plus years.

While the EU has weighed in with unprecedented financial and economic outlays since the pandemic, the sentiment from SMEs is that the aid is either insufficient or only serves as a temporary salve to deeper injuries. Speaking to Financial Times in 2021, Maxime Lemerle, the head of sector and insolvency research at Euler Hermes, highlighted the risk of “zombified companies” that receive just enough liquidity that keeps them on the brink of failure. “These zombified companies in hospitality, retail, transport, leisure and events could go bust very quickly even if the support measures are wound down quite slowly,” says Lemerle.

With the rise of robo advisors, automated portfolios, and intelligent algorithms, artificial intelligence (AI) is making an effective (and intimidating) incursion into the financial sector. Tasks that would have previously fallen to hordes of analysts are increasingly being turned over to digital processes, with remarkably efficient results. And unsurprisingly, this reality is fuelling a growing sense that finance jobs may soon fall to the implacable advance of AI.

Buttressing these fears, a recent study predicted that 230,000 jobs in the financial sector could vanish by 2025, swallowed by “artificial intelligence agents”.

The shift seems to have begun already as the Bank for International Settlements reports. An increasing number of high-profile financial institutions are moving routine processes to digital workflows and cutting down on staff sizes to support a leaner, smarter operation.

But is AI here to take all the finance jobs away? I think not. While it’s unquestionable that AI helps refine, accelerate, and improve certain previously manual processes, it’s equally important to recognise that human agents bring indispensable qualities to financial relationships, and this is what digital transformation and AI experts call the “Human Factor”.

The Human Factor in financial relationships

I believe that the increasing presence of AI in finance is primarily attributable to the sector’s specific characteristics. For instance, accounting, audit, and finance are largely focused on numbers and rationality, and these are qualities that AI currently replicates with little difficulty. Consequently, studies conducted up to a decade ago – when AI had not reached the developmental stage it currently occupies – projected that up to 54% of jobs in finance could be lost to AI.

But concerns that AI will replace human financial advisors are premature, due to the unique and indispensable value-add that people bring to the financial sector. Yes, accounting and finance are mostly numbers-led, but they also require non-linear attributes, such as the gut instincts that precede placing a winning bet on a losing stock or the imagination to try an original approach and succeed where no one else has. And this, in my opinion, is the Human Factor that AI does not possess.

As described by AI experts SAP Insights, “AI is brilliant at automating routine knowledge work and generating new insights from existing data. What it can’t do is deduce the existence, or even the possibility, of information it isn’t already aware of. It can’t imagine radical new business models. Or ask previously unconceptualized questions. Or envision unimagined opportunities and achievements.”

AI lacks what physicist Michio Kaku describes as “intellectual capitalism” – “activities that involve creativity, imagination, leadership, analysis, humor, and original thought,” and this creates a world of difference between what AI and humans can do.

AI makes finance better, but only when combined with the Human Factor

Like most industries, AI has facilitated the financial sector’s most valuable and influential advancements in recent years. For an industry struggling beneath the weight of billions of daily transactions, all with hundreds of spinoff processes, the addition of automation has unburdened and liberated many financial operations. Resultantly, AI unleashed greater possibilities in the sector and is potentially leading finance into the future.

But it would be a mistake to assume that AI can do it all on its own. As one expert puts it, “AI can make decisions, but not subjective choices. Humans, on the other hand, are still the best at judging intangibles and superlatives amongst options that are objectively equal.” Therefore, combining the mechanical efficiency of AI with the intellectual capitalism of human agents presents the best opportunities to unlock the possibilities in the financial industry.

After a minor COVID-induced drop, global energy investments rebounded to pre-pandemic levels in 2021 ($1.9 trillion) – an increase of 10% over 2020 – reports the International Energy Association (IEA). And in what will be music to the ears of policymakers and green energy advocates, much of the investment attention shifted from traditional fuel production to power generation and end-use sectors, with electricity attracting the lion’s share of renewable energy funding.

Amidst the tumult and uncertainty of the global pandemic, a strong theme advocated by governments and international agencies was the opportunity the crisis provided to “build back better.”

Indications from 2021 energy investments suggest that has been the case, at least as it concerns renewables. Here, I briefly discuss the extent of those investments and how they augur for a move towards net-zero and green economy.

Performance of global investments in renewable energy

Following projections that global energy demand would increase by 4.6% in 2021, energy financing experienced a general uptick as interest in infrastructure, and new projects surged during the year. Noting the upward trend in financing mid-2021, the IEA proposed that “the anticipated upswing in investments in 2021 is a mixture of a cyclical response to recovery and a structural shift in capital flows towards cleaner technologies.”

The IEA reports that global power sector investment accounted for a large chunk of 2021 energy spending, increasing by 5% to over $820 billion in 2021. Most of that financing ($530 billion) was directed toward new power generation; renewables accounted for over 70% of this amount. Asides from this, investors also saw more bang for their buck, with a dollar spent on wind and solar photovoltaic installations producing four times more electricity than ten years ago.

“Electrification was also a major driver of investment spending by final consumers,” says the IEA. “Electric vehicle sales continue to surge along with a proliferation of new model offerings by automakers, supported by fuel economy targets and zero-emissions vehicle mandates.”

In the same vein, BloombergNEF reported in January 2022 that the previous year saw a 27% rise in low carbon energy investments, with nearly half emanating from renewables investment in Asia. As a result, total yearly spend on energy transition was $755 billion, a new record in sustainable energy spending.

However, I must say that despite the encouraging short-term news, global energy investment has yet to breach the levels required to forestall climate disaster. The IEA also agrees, noting that “clean energy investment would need to double in the 2020s to maintain temperatures well below a 2°C rise and more than triple in order to keep the door open for a 1.5°C stabilisation.”

The big question, though, is where will that money come from? Blended finance might provide an answer.

Blended finance in green energy projects

Blended finance, a type of public-private partnership, combines public concessional funding with private investment to de-risk certain project types. As the World Bank puts it, “blended finance, which combines concessional public funds with commercial funds, can be a powerful means to direct more commercial finance toward impactful investments that are unable to proceed on strictly commercial terms.”

Renewable energy projects are frequently “constrained by investors’ perception of high risk and low returns,” Consequently, the flow of private capital into these projects is often halting. However, concessional financing in the form of debt, equity, or grants, appropriate risk-mitigation measures, and suitable seniority in terms of loss protection and the security of returns can make these projects attractive to investors.

The World Bank reports that blended finance could be vital in attracting larger investments in clean energy, and sub-Saharan Africa provides a model for how these partnerships can work.

Data privacy and security are a key focus for CFOs, says a 2019 survey by management consulting firm Protiviti. The survey, which polled 817 CFOs and finance leaders worldwide, reported that 84% of respondents rated data privacy/security as their top priority overall and second-highest budget item.

“Company-wide efforts – particularly regarding transparency, assurance, accounting and reporting insights – are now considered to be within the CFO’s expanding domain of accountability,” says PwC. “Areas like cybersecurity and data privacy need funding to provide preemptive action.” But the CFO’s work is pushing even those bounds of duty, as they must not only procure and channel the needed funds to IT and data security but also be actively involved in procuring cyber insurance to help meet the risk.

Key risk factors for CFOs

In a finance industry increasingly ruled by electronic data, it’s understandable that keeping customer information and internal corporate processes safe is top of mind. And considering the now commonplace incidence of expensive data breaches and security infrastructure failures, the stakes are higher than ever. Even a single breach can compromise the data of millions of customers, exposing companies to significant financial losses, severe brand damage, and expensive litigation.

For context, the average cost of a data breach was $3.79 million in 2015. But as of 2021, a data breach costs over $4.2 million, says IBM’s Security Cost of a Data Breach Report. And the longer the breach stays uncontained, the more expensive it gets, costing companies $1.26 million more if it takes 200 days or more to contain.

While the problem seems clear – companies cannot afford laxity when it concerns cybersecurity – any potential solution suffers from multiple complexities. For instance, how people interact with data is a serious risk factor for finance organizations. Data can move from permanent drives to the cloud and back easily, often with the aid of “shadow IT” or unsanctioned services. And the way that people use these services changes often, enhancing the risk that IT departments and CFOs must grapple with, both externally as it concerns their customers and internally in relation to staff.

Additionally, CFOs themselves are often targets of cyberattacks. As individuals who handle sensitive financial information with a high access level, CFOs are ideal candidates for Business Email Compromise (BEC) schemes. A threat actor may masquerade as a legitimate vendor to hijack transactions, divert funds, or steal critical financial information.

Reducing risk for CFOs

The risk for CFOs is clear, but how do they mitigate cybersecurity risk and implement solid programs that offer frontline protection? I believe the first step is knowledge-based.

As Protiviti states in its 2018 survey, “in all likelihood, most finance leaders lack sufficient understanding of the technical aspects and requirements of appropriate security and privacy measures, resulting in a fear of the unknown and substantial reliance on the effectiveness of others.”

Therefore, plugging these knowledge gaps will be indispensable to formulating and executing the required approaches to meeting cyber risk. A low-hanging fruit for CFOs in this regard is to pursue active collaboration with IT and security teams “to articulate and implement specific controls for and protections against cyber-risk.”

Climate change is an increasingly costly, and deadly, event in countries around the world.

As the World Meteorological Organization (WMO) reports, the past 50 years have seen some of the deadliest and most expensive disasters ever recorded. The period from 1970 to 2019 accounted for 50% of all climate-related disasters, 45% of reported deaths, and contributed 74% of economic loss ever suffered due to climate.

While the broad view of experts and regulatory agencies is that these weather and climate events are most likely to affect the most vulnerable, a term that would typically evoke images of at-risk people in emerging or developing economies, the spectrum of damage has also widened. People everywhere, from Russia to the US, Australia, China, India, and Chile, in urban and rural areas, are increasingly exposed to the debilitating economic and human costs of climate events.

While this reality underlines the global threat that worsening climate events pose, I believe it also indicates the global scale of cooperation needed to ameliorate the humanitarian, economic, and financial impact of these disasters on human populations.

The exorbitant cost of climate-related disasters

In the 1970s, available records pegged the financial cost of climate disaster at a daily average of $49 million. Those costs have exploded recently, and as of the 2010s, the daily economic expense of weather-related damage was a mammoth $383 million per day. Worse, three out of the ten costliest weather events on record occurred recently, all in a single year, and together they account for 35% of total economic disaster loss from 1970 to 2019.

The cost of climate change isn’t only financial though. The top ten deadliest weather hazards between 1970 and 2019 also account for well over a million deaths, according to the WMO. Droughts caused the most damage during the period, causing 650,000 deaths, followed closely by storms which led to 577,232 deaths.

While some part of these events’ deadly aspect can be attributed to their force and wide-ranging impact, they are even deadlier for the multiplier effects they produce on affected populations. For many, climate-related disasters often spell the loss of livelihood, shelter, sustenance, security, and any semblance of normal life. In the event of such disasters, the most affected find their lives suddenly and violently thrown off track, sometimes permanently. Often, only those in countries with established and extensive welfare systems are able to return to a normal life.

In my opinion, one of the harshest outcomes of climate disaster is its effect on the ability to procure a livelihood and sustenance. Climate operates quite visibly and devastatingly on food systems, and these events are significant threat factors for global food security. Addressing this topic in a report on the impact of disasters and crises on agriculture and food security, the Food and Agriculture Organization (FAO) notes that “the growing frequency and intensity of disasters, along with the systemic nature of risk, are jeopardizing our entire food system.”

Global action necessary to stall climate-driven trouble

As Qu Dongyu, Director-General of the FAO, notes, “we are living at a time that demands ambitious collective measures.” The world can only move the needle on climate-related goals and effectively tackle the growing menace of weather disaster with comprehensive and broad-based action from all sides.

Climate is a global problem, and in my opinion, it will take only global action to address this threat. Dongyu frames the task facing the world aptly when he says “the ability of governments, international organizations, civil society and the private sector to operate and cooperate in fragile and disaster-prone contexts is a defining feature for meeting global targets and achieving resilience and sustainability.”

The world must act collectively and decisively in unearthing, fine-tuning, implementing and scaling plans to cushion the effects of climate change. Trade, agriculture, and disaster-readiness are low-hanging fruits that can provide immediate results, as the World Bank asserts.

Ultimately, it is undeniable that climate disaster risk is a growing threat factor for the entire world, and mitigating this threat will require broad global cooperation to secure the lives and livelihood of at-risk populations.

After a brief COVID-induced slump, employment rates in the EU have trended upwards once more, according to Eurostat. While the EU employment rate fell to 71.7% in 2020, a drop of one percentage point compared to 2019, job markets in the region rebounded to 73.1% in 2021.

In a statement accompanying the release of the European bloc’s 2021 employment data, the EU’s statistics office noted that three member states – the Netherlands (81.7%), Sweden (80.7%), and Czech Republic (80%) – experienced particularly strong gains. And overall, 16 member states achieved or exceeded pre-COVID employment levels, which I believe indicates the incredibly resilient nature of the European job market.

Impact of the pandemic on EU employment

COVID-19 was a destabilizing event for most economies and a wide spectrum of industries. The EU employment landscape was no different. “The labour market was affected by COVID-19 restrictions in 2020”, says Eurostat, as lockdown mandates and dwindling demand in certain industries led to furloughs and layoffs.

According to bloc data, only four of 27 member states exceeded 2019 employment levels during 2020, and that by less than 0.5 percentage points. For the majority of states within the bloc, the year brought about a fall in the number of employed individuals, a common response to the pandemic pressures that reverberated worldwide.

However, certain member states experienced worse outcomes. Austria, Spain, Greece, and Ireland recorded the highest falls in employment, with rate falls of between two to three percentage points.

EU job market recovery

The EU employment rate did not remain depressed for long though. As Reuters reports, the EU posted stronger rate growth in 2021, surpassing pre-pandemic levels and instilling greater confidence in the region’s labor market and the policies set in motion to manage market flux during COVID.

As I’ve stated above, the European bloc experienced majority positive growth in employment rates during 2021, with 16 member states showing greater growth than 2019. Interestingly, Greece – amongst the low-fliers in 2020 – experienced one of the highest results in 2021 with a rate growth of nearly two percentage points (pp) over 2019 figures. Poland (+3.1 pp), Romania (+2.0 pp), and Malta (+1.8 pp) also experienced solid gains compared to 2019.

The results were not all positive though. Eurostat says 11 countries showed worse growth rates than 2019, led by Latvia, Estonia, Austria, Bulgaria, and Slovakia, which experienced the largest declines. Regardless, it’s critical to maintain context, even with these worse than expected results. While some of these states may not have surpassed pre-pandemic levels, the majority showed recovery from the 2020 depression, and this is in line with the promising job growth in the EU market.

Resilience and robustness in EU market

In my opinion, the results reported by Eurostat indicate remarkable robustness in the EU market. Compared to other regions, such as North America, which experienced more drastic falls in employment rates during COVID, the single percentage point decrease recorded in the EU shows very little job displacement during a trying period for countries around the world.

The IMF also notes these “astonishing” results, which it attributes to job retention schemes and “a rapid and forceful policy response at both EU and national levels…” And, with increasing industrial and economic activity, the EU job market has seen markedly improved conditions, which I believe will help launch greater stability and more growth in the next reporting period.

Overall, the data indicates that the EU did much that was right during the height of the pandemic, and those efforts are bearing fruit now. As the IMF notes, the EU now enjoys, by virtue of these results, “a potentially crucial head start in navigating the structural transformations that lie ahead and in making sure that nobody gets left behind.”

AAs the World Economic Forum reports, oil prices jumped above $110 per barrel in the weeks after Russia’s invasion of Ukraine. Likewise, natural gas prices more than tripled between mid-February and early March in reaction to the conflict, signaling how the war is affecting energy prices globally.
But in the case of the Russia-Ukraine conflict, energy sensitivities to the war go well beyond volatile price action.

Considering Russia’s status as a significant player in global energy supply and the lengthy profile of countries (including the EU and India) relying on its output, there are other nuanced issues at stake in the conflict.

I outline some of these below.

Effect of energy on economies

Energy, being a driver of practically all industry, is a critical global resource. However, the commodity’s volatility – resulting from sensitivity to global or regional disruptions, price seasonality, and industry concerns – makes it an economic wild card at times.

The effects of this price seasonality often vary, but in most cases, it results in disruptions to local and global supply, sharp price hikes, or scarcity in the commodity. Countries are often keen to avoid this outcome, which is one of the reasons why the international community has not placed a coordinated embargo on Russian gas.

In the case of the EU and countries such as Germany, Poland and Bulgaria, these concerns are all the more critical due to their reliance on Russian energy. The EU gets 40% to 45% of its gas from Russia, while Germany, Austria, and Italy fulfill 55%, 80%, and 40% of their respective gas needs from Russia. These countries are largely paralyzed from taking concerted action due to their potential vulnerability to shocks resulting from energy disruptions.

Energy agreement disputes and potential shutoffs

Russia and its trade partners have experienced turbulent economic relationships in the past, particularly in relation to energy agreements. For instance, Russia and Ukraine had a 2008 dispute over a gas transit deal that resulted in Russian gas supply cuts to its neighbor in the dead of winter. Likewise, Russia shut off Ukraine’s gas supply after a 2014 payment dispute, indicating the superior bargaining power of the Russian government.

Russia recently activated these same measures against Poland and Bulgaria (which gets 90% of its gas from Russia) for their failure to pay for gas supply in Russian roubles as opposed to US dollars.

Russia continues to maintain a difficult, and often complex, relationship with its trade partners, especially in Europe and North America. Consequently, responding to the potential of Russian gas shut offs demands opening up alternative supply channels to blunt the effects of any Russian action. But that option will take time to implement, which is a distinctly limited resource in times of war.

Complex economic interrelationships

While the battle lines in Ukraine seem reasonably clear, the underlying economic relationships underpinning the conflict are much less so. For instance, the two main actors – Russia and Ukraine – continue to maintain energy relations as Ukraine is still a key player in the transit of Russian gas to Europe.

To add some economic leverage to its conflict against Russia, Ukraine has also now activated some of its control over that process, blocking Russian flows to Europe. As a result, natural gas prices in Europe have jumped even higher in the day after this action, adding further complexity to the conflict.

Even the US, which has expressly forsworn energy imports from Russia, is still partly dependent on the country for 16% of its uranium imports, emphasizing the complex interrelationships that underpin the train of events.