Russia halting natural gas flows would plunge Germany into 2009-style economic crisis, Commerzbank warns

Russia halting natural gas flows would plunge Germany into 2009-style economic crisis, Commerzbank warns
Russia has slashed natural gas flows to Europe.AP Photo/Michael Sohn, File
  • Germany would tumble into a deep recession if Russia cuts off natural gas supplies altogether, Commerzbank has warned.
  • The bank said Wednesday that Europe's biggest economy could shrink 2.7% this year in a worst-case scenario.

Germany would likely tumble into a deep recession of the kind not seen since the financial crisis in 2009 if Russia decides to fully cut off natural gas supplies, one of the country's biggest banks has warned.

Commerzbank said in its interim report on Wednesday that, if Russia were to severely ration or halt gas flows, the German economy could shrink a dramatic 2.7% in 2022 and a further 1.1% in 2023.

Russia has already squeezed the amount of natural gas flowing out of the country and into Germany through the Nord Stream 1 pipeline down to 20% of capacity. Moscow has blamed sanctions for stymieing the supply of crucial kit, but European governments have said Vladimir Putin is retaliating for the Western response to the war in Ukraine.

Many economists are already predicting that the eurozone will fall into a recession in the coming months as gas prices soar and consumers and businesses cut down on their energy use. Analysts increasingly fear Russia could cut off supplies altogether, a move that would send shockwaves through the currency bloc.

"If Russian gas supplies were to be stopped, rationing would probably be inevitable, which would affect industry in particular," Commerzbank, Germany's second-biggest lender, said in the report.


Elsewhere in the report it said: "Were this to happen, the German economy would probably be plunged into a severe recession akin to the one that occurred after the financial crisis in 2009."

Germany is Europe's biggest economy and is particularly reliant on Russian natural gas. It imported more than half of its gas from Russia before the war in Ukraine broke out.

Dutch natural gas futures, the benchmark European price, have soared to record highs as Russia has slashed flows to the continent. As of Thursday, Dutch TTF futures stood at 194 euros ($198) per megawatt hour, up more than 660% compared to a year earlier.

As natural gas has soared, German power prices have rocketed to a record high. German baseload power for one year ahead stood at 397 euros ($405) per megawatt hour on Thursday, up 400% from 2021.