, 36 % of all of the natural gas consumed in the euro area came from russia, as did 22 % of all of the oil consumed. as a result of the war, the european union has taken measures to sanction certain activities that could be used to finance russia and, by extension, the invasion. in turn, russia has restricted supplies of gas to europe, and these are hard to replace in the short term. all these elements make up a cocktail that is hard to digest. the economic consequences of the energy shock are uneven across european countries due to the different extents to which they depend on russian gas and the absence of an integrated energy market. nevertheless, given that our economies are strongly interconnected, even countries less dependent on russian energy, like spain, cannot afford to be complacent. we are in this together. for example, according to an analysis by the banco de espana, 1 the spanish economy would be materially affected by a complete cut - off in energy imports from russia. according to this assessment, the impact of a complete cut - off in russian energy imports on the eu ’ s see j. quintana ( 2022 ). “ economic consequences of a hypothetical suspension of russia - eu trade ”, analytical articles, economic bulletin 2 / 2022, banco de espana. gdp would range between 2. 5 % and 4. 2 % over the first year. the impact would be between 1. 9 % and 3. 4 % in germany, 1. 2 % and 2 % in france and 0. 8 % and 1. 4 % in spain. for spain, over half of this impact would be due to international spillovers following huge losses in other european countries. these figures should be taken as short - term impacts, whose scale would be reduced if the capacity to replace russian energy imports can be increased. in this regard, europe has made an extraordinary effort to build up its gas reserves, currently at 90 % of total capacity, above the eu targets. nevertheless, whether or not these reserves prove sufficient will depend on the weather conditions this coming winter, and on europe ’ s ability to replace them as and when they are consumed. in short, the inflation pressures we had been experiencing due to the reopening of economies after the pandemic, the supply - side bottlenecks and the higher commodity prices have been exacerbated by the conflict with russia, leading to extraordinary and persistently high rates. according to eurostat, 2

a deterioration in macroeconomic prospects together with tighter financing conditions will put pressure on the debt - servicing capacity of companies and households. additionally, certain vulnerabilities in the residential real estate market can be seen in some countries on the back of buoyant house price and mortgage lending growth. i believe that the labour market will be one of the key elements that define the economic environment. its robustness could partially offset the negative consequences of the energy and inflation shocks. in this context, credit institutions will need to ensure that their provisioning levels and capital planning take into account the most adverse scenarios. but what can we do when the downward scenario has not yet materialized and the non - performing ratios are still falling? i believe that capital models should include all adverse scenarios and should be frequently streamlined using the most recent data in order to consider the most up to date situation. the european banking sector is probably already fully aware of the challenges that the pandemic and the war have brought to the table. nevertheless, as part of a supervisory authority, i must call for prudence. it is over a longer horizon ( one or two years ) that the negative impact on the ability of households and companies to meet their financial obligations is likely to emerge. these days, our financial sector is more robust as a result of all of the reforms promoted by the basel committee and implemented in the wake of the great financial crisis. our institutions have successfully tackled the covid - 19 crisis thanks to a combination of suitable risk management and the set of extraordinary measures approved by the public sector ( governments, prudential regulators and supervisors ). i am confident that they are well prepared to deal with these new tensions and turbulence. in conclusion, the economic situation remains highly uncertain, in particular due to the ongoing war in ukraine, the implied tensions in food and energy markets, the sanctions enacted against russia, and the risks surrounding the continuation of energy trade with the latter. the economic effects of this situation can now clearly be seen for the economy as a whole and, in particular, for the more vulnerable citizens. with all of the uncertainty that surrounds any projection in these changing circumstances, while we foresee a significant deceleration of the economy and high inflation in the very short - run, we also expect the economic situation to normalise thereafter, with inflation easing over 2023, once all of the factors i referred to earlier have returned to normal. fiscal policy has a key role to play, provided it targets the households and economic sectors