{"id":385310,"date":"2026-04-06T21:36:09","date_gmt":"2026-04-06T21:36:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/385310\/"},"modified":"2026-04-06T21:36:09","modified_gmt":"2026-04-06T21:36:09","slug":"eu-warns-states-against-excessive-support-to-offset-surging-energy-prices-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/385310\/","title":{"rendered":"EU warns states against excessive support to offset surging energy prices \u2013 The Irish Times"},"content":{"rendered":"

EU officials are urging governments to avoid excessive support to offset surging energy prices<\/a>, warning that the shock triggered by the Iran war <\/a>could tip into a fiscal crisis.<\/p>\n

The European Commission<\/a> is insisting in discussions with member states that proposed energy subsidies, tax cuts and price caps be limited in time and scope, according to people briefed on the talks. Brussels is seeking to avoid a repeat of the 2022 energy crisis<\/a>, which fuelled rampant inflation and ballooning deficits.<\/p>\n

\u201cThis is a unified effort from the Commission,\u201d EU energy commissioner Dan J\u00f8rgensen told the FT. \u201cWhat happens in one sector of the economy can spill over to the rest of society.\u201d<\/p>\n

Several countries including Ireland, Italy, Poland and Spain have cut fuel taxes, while others have called for EU state aid rules to be loosened. Rome is also pushing for Brussels to ease fiscal constraints to give capitals more wriggle room.<\/p>\n

The Commission was giving \u201ctechnical advice and help to countries to form these policy tools and instruments that they want to use … within the fiscal room that they have\u201d, J\u00f8rgensen said.<\/p>\n

US strikes on Iran have pushed European oil and gas prices up by about 60 per cent and raised fears of diesel and jet fuel shortages. The conflict \u201chas a huge, unfortunately, risk of leading to higher inflation with all of the negative effects\u201d, he said.<\/p>\n

The Commission was urging \u201cco-ordination and caution\u201d on any measures aimed at easing energy price pressures, officials briefed on talks between Brussels and national finance ministries said.<\/p>\n

Officials fear the conflict will trigger the third economic crisis for the EU in six years, after the Covid-19 pandemic<\/a> and Russia\u2019s full-scale invasion of Ukraine<\/a> in 2022, both of which prompted large stimulus programmes that drove up national debt.<\/p>\n

The EU\u2019s general government gross debt-to-GDP ratio rose from 77.8 per cent at the end of 2019 to 82.1 per cent in the third quarter of last year, according to the latest available data.<\/p>\n

\u201cTargeted government policies can help smooth the shock by reducing energy demand and compensating lower-income households,\u201d European Central Bank <\/a>president Christine Lagarde<\/a> said last month. However, she warned that \u201cbroad-based and open-ended measures\u201d may backfire as they could fuel demand \u201cexcessively\u201d and drive inflation. <\/p>\n

She urged policymakers to focus on \u201ctemporary, targeted and tailored\u201d action. <\/p>\n

EU economy commissioner Valdis Dombrovskis<\/a> has told national finance ministers that only \u201ccoherent\u201d, short-term emergency measures should be adopted. He warned that excessive spending would \u201chave serious fiscal implications\u201d, given that the Covid-19 and Ukraine crises, alongside a surge in defence spending since 2022, have left governments with less fiscal firepower.<\/p>\n

\u201cOur emphasis … is that we have limited fiscal room for manoeuvre, so whatever member states do has to be temporary and targeted,\u201d Dombrovskis said late last month.<\/p>\n

Italian finance minister Giancarlo Giorgetti last week said it was \u201cinevitable\u201d that Brussels would have to be more lenient in enforcing rules limiting countries\u2019 budget deficits to just 3 per cent of GDP.<\/p>\n

That came after Rome extended a \u201ctemporary\u201d 20 per cent excise tax on fuel until May 1st, and the country\u2019s official statistics agency said the 2025 deficit was 3.1 per cent of GDP.<\/p>\n

\u201cIt is clear that, unless the situation changes, discussions at the European level will be inevitable,\u201d Giorgetti said.<\/p>\n

The finance ministers of Germany, Spain, Italy, Portugal and Austria on Friday urged Brussels to impose an EU-wide windfall tax on energy companies, to ease the \u201cburden on the European economy and on European citizens\u201d.<\/p>\n

Published by Spain\u2019s finance minister Carlos Cuerpo, the letter cited a 2022 cap on the revenues of power companies during the gas price surge caused by Russia\u2019s invasion of Ukraine.<\/p>\n

\u201cGiven the current market distortions and fiscal constraints, the European Commission should swiftly develop a similar EU-wide contribution instrument,\u201d they said.<\/p>\n

Poland has slashed VAT and excise duties on fuel, amounting to 1.6bn zlotys (\u20ac370 million) a month in lost tax revenues. The government plans to offset this with a windfall tax on the profits of energy companies. Details of that new tax have not yet been published.<\/p>\n

Governments considering subsidies and other state aid to support affected sectors have been warned they must still comply with EU rules aimed at greening the economy and reducing reliance on fossil fuels, officials said.<\/p>\n

\u201cThe problem in a crisis like this is that we sometimes have to support and subsidise things that we would not normally dream about, but it has to be done in the short term,\u201d J\u00f8rgensen said. \u201cOtherwise people will freeze or production will close down.\u201d \u2013 Copyright The Financial Times Limited 2026<\/p>\n","protected":false},"excerpt":{"rendered":"EU officials are urging governments to avoid excessive support to offset surging energy prices, warning that the shock…\n","protected":false},"author":2,"featured_media":385311,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,14724,160,113,5485,37635,12965,1712,61,60,150432,9688,138288],"class_list":{"0":"post-385310","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-christine-lagarde","10":"tag-covid-19","11":"tag-economy","12":"tag-energy-costs","13":"tag-energy-crisis","14":"tag-european-central-bank-ecb","15":"tag-european-commission","16":"tag-ie","17":"tag-ireland","18":"tag-israel-iran-conflict","19":"tag-ukraine-crisis","20":"tag-valdis-dombrovskis"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/385310","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=385310"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/385310\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/385311"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=385310"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=385310"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=385310"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}