The Wall Street JournalThe Wall Street Journal

Europe skirts a winter slump, but war fallout clouds its economic future

By Tom Fairless and Paul Hannon

21 Dec 2022 · 5 min read

In response to the war in Ukraine, European companies are cutting production and redirecting investment overseas. It doesn't bode well for the region's economy, according to the Wall Street Journal.

Curated by informed

Europe’s economy looks set to avoid the severe shock that the region feared amid the energy crisis resulting from Russia’s invasion of Ukraine. But the region’s medium-term problems look harder to fix, and leave Europe facing a struggle to retain its industrial core.

Russia’s war on Ukraine and its economic fallout has shaken Europe’s export-oriented business model. Skyrocketing energy prices threaten industries at the heart of the continent’s manufacturing system, such as chemicals and metal production. Businesses around Europe are reducing production and starting to redirect investment overseas, including to the U.S., which is luring foreign companies with hundreds of billions of dollars in subsidies.

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