This wouldn’t be the first time that EU capitals have raided the profits of energy companies to ease economic pain. The EU introduced a temporary windfall tax in the wake of the Russian full-scale invasion of Ukraine in 2022, which also led to prices soaring.
The Commission is also preparing a package of measures to help countries deal with the crisis. These initiatives will ensure that electricity is taxed less than fossil fuels, and amendments to the EU’s flagship cap-and-trade system to prevent the carbon price from soaring.
Dombrovskis rejected more radical options to address the crisis, such as suspending the EU’s rules for public spending by triggering the so-called general escape clause. Brussels employed the strategy during the pandemic so that governments could spend their way out of the crisis, which plunged Europe into the deepest recession since World War II.
“A condition for activating the general escape clause is to have a severe economic downturn in the euro area or European Union,” the Latvian commissioner said. “We are currently not in this scenario.”
The message will disappoint Italy, whose prime minister, Giorgia Meloni, told the Italian legislature Thursday morning that if the crisis worsens, suspending the EU fiscal rules should not be considered taboo. Dombrovskis said that the Commission will monitor economic developments, which could still deteriorate amid a fragile ceasefire reached between the U.S. and Iran.
The impact of the war on the EU will be front and center of the Commission’s next economic forecast in May. Dombrovskis has repeatedly warned that EU growth could be revised down by up to 0.6 percentage points for this year and next.