While 2022 was expected to be a great year after the pandemic and bold government spending on weary households to restore a sense of normalcy in two years, everything finally changed on February 24 with Russia’s invasion of Ukraine. The crisis has become permanent.

A recession is now almost certain, inflation is approaching double digits, and a winter of energy shortages is looming. “The crisis is now considered the new normal,” said Alexander Bobar, CEO of the Carrefour supermarket chain. “What we’ve been used to for the past few decades – low inflation, international trade – is over,” he told investors. The change is dramatic. A year ago, most economists were forecasting growth in 2022 close to 5%. Now their main assessment is the winter decline. Inflation in the Eurozone at 9% is unprecedented in the last 50 years.

Many expected a brighter 2022 after two years of the pandemic. However, Russia’s invasion of Ukraine changed everything.

Consumers turn to discount networks and refuse expensive goods. They also started skipping some markets. “Life is getting more expensive and consumers are reluctant to spend money,” said Robert Gentz, one of the chief executives of German retailer Zalando. Businesses have been doing well so far because they have had plenty of room to set prices for goods due to previous supply constraints. However, energy-intensive industries are already suffering. Nearly half of Europe’s aluminum and zinc smelting capacity has already been decommissioned, and much of its gas fertilizer production has ceased. Tourism is a rare bright spot as people hope to spend some of their accumulated savings and enjoy the first carefree summer since 2019. However, even this sector is under pressure due to capacity and labor shortages, as those laid off during the pandemic did not want to return. Major airports in Europe, such as Frankfurt and Heathrow, were forced to curtail flights simply because they did not have the necessary staff.

“Today’s gas shock is nearly double what we experienced in the 1970s with oil,” said Carolyn Bain, an analyst at Capital Economics. “Over the past two years, we have seen a 10-11-fold increase in the spot price of gas in Europe.” The EU plans to accelerate the transition to renewable energy and phase out Russian gas by 2027, which is not easy.