The European Commission (EC) has warned the governments of the European Union countries of the risk of a budget crisis that may arise due to excessive spending to support the economy in the face of rising energy prices, writes the Financial Times, quoted by Focus.
In many EU countries, measures to limit the rise in fuel prices are already being introduced or discussed. Among them are electricity subsidies, reducing the tax burden and establishing price ceilings. However, Brussels notes that such measures should be temporary and limited in nature. The European Commission fears that prolonged and large-scale support will increase inflationary pressures and increase the budget deficit.
"This is a general task of the European Commission. "What happens in one sector of the economy can affect the whole of society," European Energy Commissioner Dan Jorgensen told the FT. According to him, the EC is helping countries choose support instruments, taking into account their budgetary constraints.
The energy crisis caused by the escalation of the conflict in the Middle East, in particular the suspension of shipping in the Strait of Hormuz - a key route for the supply of oil and liquefied natural gas - has become a cause for concern. This has led to a surge in fuel prices in Europe and the United States.
The current situation, the FT specifies, could become the third serious economic crisis for the European Union in the last six years, after the COVID-19 pandemic and the economic consequences of the Russia-Ukraine conflict. The level of public debt in the EU has risen from 77.8% of GDP in 2019 to 82.1% at the end of last year.