Will the rise in the oil price bring the euro zone back to a demand regime?

Significant recruitment difficulties for companies are now appearing in the euro zone, which may suggest that the euro zone will change from a demand regime (where production is limited by a shortfall in demand) to a supply regime (where production is limited by a shortfall in supply). But the euro zone is also affected by a sharp rise in the oil price, while the indexation of wages to prices is low. This means that the rise in the oil price will reduce real household income sharply without significantly increasing companies’ production costs: it therefore mainly generates a negative demand shock, leading to the possibility that the euro zone may return to a demand regime, with a shortfall in demand for goods and services and where GDP falls below potential GDP. The euro zone’s shift to a supply regime will perhaps have been only very temporary.