EU warns of new financial crisis

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EU warns of new financial crisis

Could the fall in share prices and the profound depreciation of currencies in the flu be the trigger for a new financial crisis? EU High Representative Josep Borrell has warned that this could trigger a new financial crisis.

EU warns of new financial crisis

Borrell published a blog post about the Russian-Ukrainian War and its implications for the global economy, noting that the EU has close economic ties with both Russia and Ukraine, and that the EU also feels the negative economic consequences of the war.

Borrell recalled that inflation has risen sharply due to the war, driven by the pressure of food, energy and major commodity prices.

Reminding that inflation remained high throughout 2021 as a result of the increasing demand caused by the economic recovery after the pandemic and the ongoing interruptions in the value chain, Borrell noted that the war accelerated the increase in inflation.

Josep Borrell reported that inflation affects the poorest and weakest more, while also increasing inequalities around the world.

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“In recent weeks, we have observed a rapid decline in share prices in financial markets and an extraordinary depreciation in cryptocurrencies,” Borrell said, noting that this could trigger a new financial crisis.

Borrell argued that in this case, international capital would move out of high-risk investments in finance and move to safer places like the United States.

Stating that the risk has started to materialize, Borrell said that the dollar exchange rate has risen rapidly in the recent period, which feeds inflation more in countries whose currency has lost value.

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