Volatility in European power markets stemming from EU and U.K. sanctions against Russian energy — imposed in retaliation for Russia's invasion of Ukraine in February — may soon cool off, but only after carving a slice out of the continent's economy. 

On Monday, U.K. Prime Minister Liz Truss announced plans to cap household energy bills at the equivalent of $2,300 annually. Meanwhile, German Chancellor Olaf Scholz unveiled a 65 billion euro relief package to ease the pain of energy prices that have quadrupled in his country.

These crisis measures are meant to reduce the economic damage caused by a continentwide natural gas supply crunch following the cancellation of Nord Stream 2 and Russia's shutdown of Nord Stream 1. Historically high energy prices could sap consumers' ability to spend money on other goods and services, dragging down economic growth.