How to prevent Europe’s energy crunch spiralling into an economic crisis

, French nuclear power and Norwegian hydroelectricity wreak havoc in Europe’s energy markets, prices are verging on the surreal. Benchmark natural-gas prices surged by 30% last week. Last summer French and German year-ahead contracts for electricity traded at around €100 ($118) per megawatt hour. Recently they rose above €1,000. Prices have fallen since, but gas still trades at the equivalent of around $400 for a barrel of oil. Shell’s boss has warned that the crisis will last more than one winter. The pain will be savage and will spread as households’ and firms’ existing energy contracts . That will intensify the squeeze on the economy that is under way as the European Central Bank raises interest rates to combat inflation. Many economists in the next few months, and the single currency is flirting with its lowest level against the dollar in two decades. The prospect of unrest and squabbles among member states looms ahead.