European governments' bill to shield companies and households from soaring energy costs has soared to nearly 800 billion euros, Brussels-based think-tank Bruegel has revealed.
According to the researchers, EU countries have now earmarked or allocated 681 billion euros in energy crisis spending; Britain has allocated 103 billion euros while Norway has earmarked 8.1 billion euros since September 2021.
On the basis of gross spending by individual countries, Germany tops the spending chart, having allocated nearly 270 billion euros to shield consumers from high energy prices while Luxembourg and Denmark lead on per-capita spending.
Back in September, the German government announced that it will ditch earlier plans for a gas levy on consumers and instead introduced a gas price cap to curb soaring energy bills, with German Chancellor Olaf Scholz setting out a €200 billion ($194 billion) “defensive shield” to protect companies and consumers against the impact of soaring energy prices.
"The German government will do everything in its power to bring [energy] prices down. We are now putting up a large defensive umbrella ... which we will endow with €200 billion," Scholz said at a press conference in Berlin, which he attended virtually due to a Covid-19 quarantine.
Under the new plan, Berlin introduced an emergency price brake on gas and electricity prices and also scrapped a previously planned gas levy on consumers to avoid any further price increases. The gas levy, which was slated to come into effect in September and remain in place until April 2024, was intended to help utilities cover the cost of replacing Russian supply. The government also suspended its limit on new debt of 0.35% of gross domestic product. German gas importer Uniper has said that the country does not rule out undertaking gas rationing at some point following Russia's decision to indefinitely halt gas flows via the Nord Stream 1 pipeline.
However, other EU nations are not happy about massive spending by Germany and other European economic powerhouses, with some EU capitals arguing that encouraging more state aid would unsettle the bloc's internal markets.
By Alex Kimani for Oilprice.com