By Francesco Canepa
FRANKFURT, Jan 18 (Reuters) – When Christian Hurtz opened his electricity bill just before New Year, his jaw dropped: it had more than trebled from the rate he signed up for.
The 41-year-old software developer from Cologne, Germany, is one of millions of Europeans who have seen their energy costs balloon as providers go out of business because of soaring gas prices or pass them on to customers.
Spending more on heating, lighting or running a car is straining many households’ budgets and shaking expectations that a consumer-led economic boom will follow pandemic-era restraint.
“At first I thought that was the amount for three months,” said Hurtz, whose bill came from the provider of last resort after his own energy company stopped supplying.
“When I realised they wanted it every single month, my jaw dropped. It spoiled my Christmas break a bit,” he told Reuters.
In 2020, euro zone households spent an average of 1,200 euros on electricity and gas. That figure is set to swell to 1,850 euros this year, according to analysts at BofA, as geopolitical tensions push up natural gas prices which the scarce supply of energy from renewable sources cannot offset.
Hurtz and hundreds of thousands of other customers of private energy firms that went out of business or stopped supply last year – including 39 in Germany alone – have found themselves paying two or three times the rates they thought they had secured.
This year was meant to see consumer spending drive growth after two years of COVID-19 lockdowns and layoffs.
The European Central Bank said in December it expected the euro zone economy to expand by 4.2percent in 2022, driven by a 5.9percent surge in private consumption.
But higher energy costs hitting households at home and at the petrol pump – with oil rising by half and wholesale prices for natural gas quadrupling in a year – are throwing those forecasts into question.
Energy typically accounts for slightly more than 6percent of private consumption in the euro zone but this could rise to 8-10percent as a result of higher prices, according to ING’s estimates, reducing what is available to spend on other goods.
“This would also be in line with previous episodes of higher energy prices, in which almost all countries saw other expenditures dropping,” ING’s economist Carsten Brzeski said.
The hit to growth is likely to be significant.
In Italy, for example, gas and electricity prices will shave 2.9percent off household consumption this year and 1.1percent off… Nokia News – Short Summary.