EU leaders have struggled to agree on whether to impose more curbs on Russian energy and on how to best support households and firms in the face of spiralling energy prices. But most national governments have in the meantime been going it alone, with Germany joining in this week with cuts to fuel taxes and handouts to workers and families, worth 0.5% of GDP. Meanwhile, the surveys point to a marked deterioration in activity to come as the war in Ukraine takes its toll on consumers’ and firms’ confidence. Next week, we expect data to show headline inflation reached 6.7% in March, highlighting the upward pressure on prices from the conflict.
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