Dutch employers’ organisation VNO-NCW has warned against underestimating the economic danger presented by the war in Ukraine, and says it could spark a 1970s-style recession.

On Wednesday, macro-economic think-tank CPB said inflation may average 5.2% this year because of high energy prices but that the Russian invasion of Ukraine may force that even higher.

The employers’ body points out that every energy crisis in history has ‘led to a recession’ and says that energy prices will remain high for years.

For example, many companies are finding it difficult to pass on the increased prices. In addition, imports of important raw materials from Russia, Ukraine and Belarus are coming to a standstill and prices for raw materials are sky high where they are available, VNO-NCW director Ingrid Thijssen, said.

Current economic forecasts focus mainly on direct economic ties with Russia, she said, while the indirect effects of the war are increasing rapidly.

‘We are already seeing that in uncertainty in the financial markets,’ she said. ‘We risk a 1970s scenario with prolonged high inflation and a recession.’

The VNO-NCW is closely monitoring the effects of war on industry, she said. ‘It is important to ensure that this situation does not result in more economic problems than necessary, in addition to all the human suffering and concerns about Europe’s security.’