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Weathering the Storm: The Socioeconomic Impact of the Energy Crisis

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Navigating Europe’s Socio-Economic Crisis

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Abstract

The majority of European countries are currently suffering from rampant inflation, a large part of which can be attributed to the rapid increase in energy prices. The Czech Republic has been particularly badly affected by the energy crisis, with inflation of almost 17% in February 2023. Therefore, this chapter examines in detail the general and energy inflation in the Czech Republic using data from the Czech Statistical Office, Eurostat, the ONS, and the OECD. More specifically, the chapter identifies those socioeconomic groups that have been most affected and which have sustained the largest financial losses since the commencement of Russian aggression against Ukraine, compares the position of the Czech Republic to rest of Europe, and reveals those groups that the government should primarily focus on in terms of optimising the impacts of supportive measures. The results show that the average Czech household suffered from a general inflation rate of 16.9% and an energy inflation rate of 35% between February 2022 and February 2023, losing 62,640 CZK overall and 18,010 CZK solely due to rising energy prices. This constitutes a loss of 12.2% of annual net household income due to overall inflation, and a loss of 3.5% of annual net household income due to energy inflation alone. Czech Republic is, therefore, ranked as the fourth most affected country in Europe. The most vulnerable socioeconomic groups have been identified as pensioners, the poorest families, single parents, and households in the smallest municipalities. Consequently, government support should primarily be targeted at these most affected groups.

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Notes

  1. 1.

    The tenant-landlord problem refers to the fact that the insulation of rented accommodations is usually of a poorer quality than that of owner-occupied accommodations. This is because the landlord has no motivation to install more energy-efficient technology in rented accommodations, as it would not benefit them personally in any way (Druckman & Jackson, 2008; Meier & Rehdanz, 2010; Taneja & Mandys, 2022).

  2. 2.

    All of the data sources are available online at: Czech Household Budget Survey, OECD, Eurostat—expenditure, Eurostat—energy prices, CZSO—petrol and diesel prices, Eurostat—car motor shares, Statistics on Income and Living Conditions, Eurostat—income, household size.

  3. 3.

    The Visegrád Group, also known as the V4, is an alliance of four Central European countries: Czech Republic, Hungary, Poland, and Slovakia. Established in 1991, the group aims to promote cooperation and dialogue on political, economic, and cultural issues among its member states.

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Authors and Affiliations

  1. Research Institute for Labour and Social Affairs (RILSA), Prague, Czech Republic

    Filip Mandys

  2. European Investment Fund (EIF), Luxembourg City, Luxembourg

    Filip Mandys

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  1. Filip Mandys
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Correspondence to Filip Mandys .

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  1. RILSA, Prague, Czech Republic

    Robin Maialeh

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Mandys, F. (2023). Weathering the Storm: The Socioeconomic Impact of the Energy Crisis. In: Maialeh, R. (eds) Navigating Europe’s Socio-Economic Crisis. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-44873-7_6

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  • DOI: https://doi.org/10.1007/978-3-031-44873-7_6

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