European Countries Racked Up Nearly €800 Bln Energy Crisis Spending Bill, Brussels Think Tank Says
© Photo : PixabayEuros
© Photo : Pixabay
Europe has been grappling with a mind-boggling energy bill as anti-Russian sanctions imposed shortly after the start of the special military operation in Ukraine in late February 2022 backfired on European economies and accelerated inflation.
European countries have racked up an impressive spending bill as part of fiscal policy efforts to tackle the raging energy crisis, according to policy research think tank Bruegel.
Nearly 800 billion euros ($1.2 trillion) have been forked out to cushion the blow of surging energy costs for households and businesses, the Brussels-based researchers stated on Monday. This spending was now seen as equaling the EU's 750-billion-euro COVID-19 recovery fund, agreed in 2020.
Breaking down the crisis spending, the think tank revealed that European Union countries had allocated an estimated 681 billion euros for the purpose, as they rushed to introduce measures to regulate retail power prices, slash energy taxes, and subsidize energy bills.
Thus, the research calculated that Germany topped the charts as the biggest spender, with approximately 270 billion euros channeled into its aid packages tailored to mitigate the costs since September 2021. Measures have included everything from one-off payments to tax breaks for businesses.
The UK set aside 103 billion euros in such spending, with Italy and France the next highest, albeit each spending under 150 billion euros. As for other European countries, their spending amounted to just a fraction of that set aside by the big spenders. For example, Norway was estimated to have allocated 8.1 billon euros to manage the energy crunch costs.
30 January 2023, 14:12 GMT
Bruegel issued a similar spending report in November 2022, with research revealing at the time that about 706 billion euros had been spent, in total, as European countries grappled with the challenges of the energy crisis.
In its new report, the think tank laid emphasis on the need for more "targeted support, prioritising lower income levels," as opposed to measures such as VAT cuts on petrol or retail power price caps.
"Instead of price-suppressing measures that are de facto fossil fuels subsidies, governments should now foster more income-support policies targeted towards the lowest two quintiles of the income distribution and towards strategic sectors of the economy," research analyst Giovanni Sgaravatti stated.
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After Moscow launched its special military operation in Ukraine in February 2022, the US, European Union, and Britain imposed a swathe of economic restrictions against Russia. In December, the EU adopted its ninth package of sanctions, while joining the G7 decision to set a price cap on Russian oil at $60 per barrel. The cap will be reviewed every two months to remain 5% below the International Energy Agency benchmark. Moscow, however, refused to accept the price limit, saying that Russian oil would only be sold to countries on a market basis.
So far, the backfiring sanctions have fed into a major fuel crunch in Europe, record-high inflation, and skyrocketing energy prices, leaving citizens of European countries facing a bitter cost of living crisis.
13 February 2023, 07:24 GMT