Aug 28 (Reuters) – New tensions in Ukraine, which has
accused Russia of further incursions, may serve to light a fire
under efforts to bring looser monetary and fiscal policies to
the euro zone.
While Russia has denied the allegations, NATO on Thursday
said that well over 1,000 Russian troops were now inside Ukraine
in what would represent a large increase.
This makes more likely some interruption of Russian energy
shipments this winter and will exacerbate the economic effects
of sanctions both sides are imposing on one another.
The net result is clearly not good for the euro zone
economy, which is already struggling with outbreaks of recession
in Italy, dangerously low inflation and high rates of
“In August, economic sentiment in the Eurozone already
dropped by the biggest margin since the heyday of the euro
crisis in mid-2012. A further escalation would pose a serious
risk of a renewed recession in the still-fragile economy,”
Christian Schulz, senior economist at Berenberg Bank, wrote in a
note to clients.