Volkswagen CEO Herbert Diess told the FT in an interview published Thursday that a prolonged war in Ukraine would be "very risky" for the European and German economies - and that it ultimately might be even worse for them than COVID.
According to the FT, Diess said the economic damage from the war could be "very much worse" than the pandemic.
"The interruption to global supply chains could lead to huge price increases, scarcity of energy and inflation," Herbert Diess, chief executive of the German carmaker, told the Financial Times.
"It could be very risky for the European and German economies."
The warning, from one of Europe's most authoritative business leaders (since Volkswagen is still Europe's biggest car maker by sales volume), is just the latest reminder that the ripples from the conflict are being felt far away from the battlefield. Just yesterday, McDonald's and Coca-Cola caved to public pressure and decided to temporarily suspend operations in Russia. They're the latest in a long line of western businesses who have cut ties.
Volkswagen, like all auto makers, has struggled thanks to shortages of semiconductor supplies.
But Deiss fears these "supply chain" risks will worsen thanks to western sanctions against Russia, which has become seriously entangled with Europe in terms of not just oil and gas exports but wheat and other commodities as well.
But it's not just the supply chain issues: there's also the "threat of war", which Europeans should take seriously.
The warning from one of the continent’s best-known business leaders comes as western governments ratchet up their economic efforts to punish Russia, a key global supplier of commodities from gas to palladium, for its invasion of Ukraine.
The sanctions imposed so far - and the prospect that the Kremlin could retaliate by turning off gas supply to Europe - has sent energy markets into turmoil.
"The threat of this war for Germany and Europe is huge," said Diess, pointing out that higher inflation could severely squeeze consumers.
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