The temporary tax on large fortunes raised this week by the Spanish Government is just one more announcement in the list of extraordinary measures that are being adopted in Europe to weather the energy crisis: nationalisations, VAT reductions, extraordinary taxes on companies, aid to homes, free public transport...
The war in Ukraine has shattered classical budget orthodoxy at a time when the continent was just beginning to recover from the economic and financial blow of the pandemic, with debt at record levels despite a heavy infusion of public money. made from the Union. Europe's response to the energy price shock has been as extraordinary as it is costly.
According to Bruegel, the prestigious center for economic studies based in Brussels, European governments have mobilized around half a billion euros in measures to protect citizens and companies from the effects of rising gas and electricity prices, some 314,000 million euros in the case of the European Union (only the United Kingdom has announced measures worth 178,000 million euros). If the money dedicated to rescuing companies is also taken into account, the figure rises to 450,000 million euros only in the Twenty-seven.
Germany, the first economy of the club, which this week has nationalized the gas company Uniper, is the EU country that has invested the most money to face the crisis, 100,000 million euros (2.8% of GDP), followed by Italy with 59,200 million euros, 3.3% of its GDP. The third country that has spent the most to face the energy crisis is France; Despite not depending on gas imports, as of September 21, it had dedicated 53.6 billion euros, the equivalent of 2.2% of its national wealth.
According to Bruegel's calculations, the Spanish government has activated public aid worth some 35,000 million euros to alleviate the pressure of the energy crisis on households and businesses. The figure is equivalent to 2.9% of GDP. According to this study, the greatest budgetary effort in relative terms has been carried out in the United Kingdom, which has mobilized aid worth 6.5% of its GDP, and within the EU, in Croatia (4.1%) and Greece (3.7%).
But the crisis does not subside and the count moves practically every week. Although from Europe at first the crisis was approached as a temporary problem, the prolongation of price increases in wholesale markets has given a structural profile to theoretically temporary measures that worries some economists and institutions. "Clearly, this is not sustainable from the point of view of public finances," says Simone Tagliapietra, an analyst at Bruegel. “This level of intervention may aggravate economic divergences within Europe. It is important to coordinate these policies between countries”, she warns.
The rules of the Stability and Growth Pact are suspended until 2023 but regardless of how the finances of the member states are treated from Brussels, the figures are there and the truth is that this enormous mobilization of public resources occurs with the public debt in maximums in countries such as Italy (153% of GDP), Greece (189%), Spain (118%) or France (114%) and the threat of an imminent recession.
The European Commission, which will present its proposals to review the Pact in mid-October, has announced that the debt reduction paths will be adjusted to the situation of each country, an idea that fits in with the recommendations published this week by the Monetary Fund International. In view of the magnitude of the current crisis, the institution once again recommends the creation of a permanent anti-crisis fund for the EU to help countries in trouble without having to overcommit their public finances.
