What war has done to Europe’s economy

After three years of pandemic shutdowns, reopening booms, war, clogged supply chains and nascent inflation, European policymakers thought that 2023 would be the year the old continent returned to a new normal of decent growth and sub-2% inflation. Europe’s economy is indeed settling down. Unfortunately, though, the new normal is considerably uglier than economists had expected.Start with the positives. The euro zone has proved remarkably resilient, considering the shock of Russia’s invasion of Ukraine and the energy crisis. Gas is now cheaper than it was on the eve of the conflict, after prices spiked last summer. Governments were not forced to ration energy as had been feared at first, in part thanks to unseasonably warm weather. Headline inflation, having reached a record 10.6% in October, is falling.