The fiscal cost of the Ukraine war

We estimate that euro-zone governments’ fiscal deficits will be around 1% higher than expected this year, as a result of the war in Ukraine, mostly due to government subsidies for energy, support for refugees and higher defence spending. This will soften the blow from the war to economic activity. Beyond this year, euro-zone fiscal deficits are likely to remain higher than previously anticipated as defence and energy-related spending increases. Euro-zone Drop-In (31^st March, 09:00 EDT/14:00 BST): Is Europe at risk of recession? Join our Europe and Markets economists for this 20-minute briefing this Thursday about war, inflation, supply chain disruptions and what this could all mean for the ECB. Register here.