French companies are deeply concerned that falling natural gas prices will hinder continued industrial growth.

According to a monthly survey of 8,500 companies conducted by the Bank of France and reported by Bloomberg, French businesses expect the economy to continue expanding in January. These firms believe France will not be impeded by the 'headwinds' of rising energy costs—particularly surging natural gas prices. The survey shows that, as of the end of December, economic activity in France exceeded expectations. Cumulative GDP growth for the fourth quarter of 2022 stood at 0.1%. Conditions have improved in certain industrial sectors and in construction, and businesses hope for further stabilization. According to central bank data, the level of uncertainty among French companies declined slightly in December, and many firms reported improved financial conditions. Companies are no longer worried about rising natural gas prices and remain calm regarding risks stemming from the energy crisis. Bank of France Governor François Villeroy de Galhau told France Culture radio: “France will avoid a hard landing in the form of an economic recession. The actual health of our economy is somewhat better than our collective morale.”

Electricity prices surge by 1,000%! Europe’s power crisis erupts—EU to hold emergency meetings! Energy giants announce withdrawals; Biden takes major action! Fertilizer producers cut output—will food supply be affected?

Europe’s energy crisis is intensifying. The electricity crisis in Germany and France is especially severe, with electricity prices repeatedly hitting record highs. On August 26, the price for French baseload electricity delivery for 2023 reached €1,130 per megawatt-hour—the first time ever exceeding €1,000—and surged 25% intraday. Over the past year, electricity prices have risen roughly tenfold. Germany’s equivalent contract also hit a record high, climbing 33% intraday to €995 per megawatt-hour, with a cumulative weekly gain (August 22–26) of approximately 70%. Meanwhile, UK forward electricity prices have skyrocketed—from £242 per megawatt-hour in June to £1,000 per megawatt-hour. In the latest conference call between energy traders and senior management of National Grid—the UK’s electricity system operator—the words “emergency” and “shortage” were repeatedly used. Frontline traders warned that this winter will be extremely difficult for Europe. Traders also expressed one of their greatest current concerns: if European countries adopt beggar-thy-neighbor policies and shut down cross-border electricity supplies under systemic stress, what consequences might follow? Norway is already considering such measures. Currently, Europe’s electricity crisis stems primarily from two factors: first, severely constrained Russian natural gas supplies to Europe; second, the continent’s historic drought and extreme heat during summer 2022. Currently, Nord Stream 1’s gas flow stands at only 20% of full capacity. As part of Russia’s latest counter-sanctions measure, the Nord Stream 1 pipeline will halt gas deliveries again for three days starting August 31. Amid tightening supply, on August 26, benchmark European natural gas futures hit a new high—marking their sixth consecutive week of gains, the longest uninterrupted rally so far this year. Russian experts warn that, should temperatures drop sharply or gas storage levels prove insufficient, European natural gas prices this winter could surpass the historic threshold of $5,000 per thousand cubic meters. Moreover, unprecedented heat and drought have raised river water temperatures to levels too high for cooling nuclear reactor cores—disrupting nuclear power generation across Europe. Take France as an example: nuclear power generation has fallen to its lowest level in over 30 years. According to RTE, France’s grid operator, nuclear reactor availability stood at just 42% as of Friday. Previously, France had long been one of Europe’s largest net electricity exporters—but this year it has been forced to import electricity, further aggravating the continent-wide power crisis. Recently, Électricité de France (EDF) announced that the restart timelines for several of its nuclear plants will be later than previously anticipated—meaning electricity markets in France will face acute strain this winter, particularly during periods of low wind generation. Kathryn Porter, energy consultant at Watt-Logic, warned that European countries may simultaneously attempt to import electricity, posing enormous challenges—and some nations may resort to rationing industrial electricity supply. Such extraordinarily high electricity prices may force certain industries to significantly scale back production—or even suspend operations altogether. Across Europe, fertilizer producers have drastically curtailed output, threatening food and agricultural security. Analysts warn that many companies are halting production because they cannot keep pace with soaring costs—meaning inflationary pressures on end consumers will persist.

EDF pauses Edison stake sale plan as gas supply uncertainty clouds outlook

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France's EDF suspended plans to sell a stake in Italian subsidiary Edison due to LNG supply uncertainty from Qatar amid Middle East tensions. Cancellations may last until December, impacting long-term energy forecasts.

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