Inflation & inequality
Bruegel, the European economic “think tank” recently published an article on the rise of inequality due to higher inflation. The main conclusion is that the surge in energy prices is severely aggravating the disproportional impact of inflation on the lowest income households. This is explained by the fact that lower-income workers spend a higher percentage of their total income on energy and also because the upper echelons usually have their savings invested in stocks or inflation-linked bonds which, to some extent, shield them from inflation crisis.
- The Euro area is experiencing its highest level of inflation (5%) since the creation of the common currency. Rising inflation has mostly been driven by the rise in energy prices.
- Inflation already tends to weigh more heavily on the lower-income households:
- Lower-income workers spend a higher percentage of their total income on energy, despite having similar consumption rates of energy.
- They are more likely to hold their savings in cash or in very low interest rates bank accounts, whereas the upper echelons usually have their savings invested in stocks or inflation-linked bonds, which shield them from inflation crisis.
- The bottom quartile of households in Belgium experienced a 6.9% inflation rate, in December of 2021, whereas the top quartile of Belgian earners experienced a 5,49% of inflation. A similar phenomenon was observed in Italy and France.
- Public strategies to shield households from rising energy prices work at a cost: Inflation inequality is not rising as much in France as it is in Italy or Belgium because of the introduction of certain measures (possibility for lower-income households to opt for regulated energy prices). The French government has already spent more than 20€ billion in measures to shield the public from rising energy prices. These kind of measures are viable only if the energy prices rise is temporary.
- The article suggest that the European Union need to start thinking on more efficient measures to mitigate the inevitable rise of energy price, bearing in mind that the prices of energy from fossil fuels will continue to be pushed up by the decarbonization process of the economy.
Filter results
According to the World Economic Forum´s Global Risk Report 2026, geoeconomic confrontation, mis- and disinformation and societal polarization make up the top three short-term risks, while environmental risks dominate in the long term.
According to the World Economic Forum, over the last few years AI has moved from experimentation to workflow integration, promising systemic gains in productivity while also raising critical questions around economic inclusion, values, trust and resilience.
According to AFME, a clearer, more coherent, and proportionate regulatory environment, without unnecessary layers and focuses on growth and competitiveness, is keyl to increase investor confidence, unlock private capital and deepen European capital markets
According to the Center for the Governance of Change at IE University, Europeans support technological progress if it reinforces security, inclusion, and social welfare; but resist it when change feels imposed, opaque, or misaligned with their values.
According to a recent report released by CEPS, European financial regulators should adopt competitiveness as a formal secondary objective, following the precedent established by the UK's Financial Services and Markets Act 2023.
According to the OECD. SMEs and start-ups that grow rapidly contribute significantly to job creation, economic growth and competitiveness. Indeed, SMEs that grow by one-third over a three-year period, contribute about as much to job creation as large firms.
According to @McKinsey, banks must prepare for a new growth curve. Strategic precision —the ability to combine technology, capital discipline, and deep customer insight— will distinguish the leaders from the laggards.
According to Kristalina Georgeva IMF Managing Director, lifting growth requires three things: one, regulatory housecleaning to unleash private enterprise; two, deeper regional integration; and three, preparedness to harness AI.
According to The European House – Ambrosetti, the European Union has an opportunity to boost competitiveness and growth by simplifying regulatory and supervisory frameworks, particularly in the areas of sustainability and the financial sector.
According to Ramón Casilda Béjar, Spain, in today’s complex geopolitical landscape, has the opportunity to strengthen its role as a bridge and connecting country between Ibero-America and the European Union, revitalizing investment flows in both directions.
According to @ECB, in moments of acute stress, the public often turns to physical currency as a reliable store of value and a resilient means of payment, underscoring the crucial role it plays above and beyond everyday transactional convenience
According to Juan S. Mora-Sanguinetti, in Spain a 10% increase in regulatory volume leads to a 0.5% drop in employment in companies with fewer than 10 employees.