EU officials urge national governments to avoid excessive support in compensating for rising energy prices and warn that the shock triggered by the war in Iran could degenerate into a fiscal crisis. The Commissioner for Economy states that a series of excessive expenditures to offset price increases would have “serious fiscal implications”.
The European Commission insists in discussions with member states that energy subsidies, tax reductions, and proposed price caps should be limited in time and scope, according to sources from the Financial Times.
Brussels is trying to avoid a repeat of the energy crisis of 2022, which fueled rampant inflation and rapidly growing deficits. “This is a unified effort on the part of the Commission,” said the EU Energy Commissioner, Dan Jørgensen, for FT, writes Mediafax.
“What happens in one sector of the economy can spread to the rest of society”.
Italy, Poland, and Spain have reduced fuel taxes. Other states are calling for the relaxation of EU rules on state aid.
Several countries, including Italy, Poland, and Spain, have reduced fuel taxes, while others have called for the relaxation of EU rules on state aid. Rome is also pressuring Brussels to ease fiscal constraints to give capitals more freedom of action.
The Commission provides “technical advice and assistance to countries in developing these tools and policy instruments they wish to use within the fiscal maneuvering margin they have”, Jørgensen stated.
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