Brussels, Feb. 13 (BNA): The bill for European countries to protect households and companies from rising energy costs has jumped to nearly 800 billion euros, researchers said on Monday, urging countries to be more targeted in their spending to tackle the energy crisis.
Reuters reported that European Union countries have allocated or allocated 681 billion euros for spending on the energy crisis, while Britain has allocated 103 billion euros and Norway 8.1 billion euros since September 2021, according to an analysis by the Bruegel think tank.
The total of 792 billion euros compares with 706 billion euros in Bruegel’s latest assessment in November, as countries continue through the winter to grapple with the fallout from Russia cutting off most gas shipments to Europe in 2022.
Germany topped the spending chart, allocating nearly €270 billion – an amount that exceeded all other countries. Britain, Italy and France came in second, although each one spent less than 150 billion euros. Most EU countries have spent a fraction of that.
On a per capita basis, Luxembourg, Denmark and Germany were the biggest spenders.
The spending that countries have earmarked for the energy crisis is now in the same league with the €750 billion for the EU’s COVID-19 recovery fund. It was agreed in 2020, which saw Brussels take on joint debts and pass them on to the bloc’s 27 member states to tackle the pandemic.
These plans have raised fears in some EU capitals that encouraging more state aid would upset the bloc’s internal market. Germany has faced criticism over its massive energy aid package, which far exceeds what other EU countries can afford.
Bruegel said governments have focused most of the support on measures not intended to reduce the retail price consumers pay for energy, such as value-added tax cuts on gasoline or caps on retail electricity prices.
The think tank said the dynamic needs to change, as countries are running out of fiscal space to maintain such ample funding.
“Instead of price suppression measures that are in fact subsidies for fossil fuels, governments should now promote more income support policies that target the bottom two brackets of the income distribution and towards strategic sectors of the economy,” said research analyst Giovanni Sgarafati.
FKN