Energy prices: Von der Leyen not currently considering suspending European budget rules
The European Commission believes that the conditions for giving member states more budgetary room to mitigate the impact of high energy prices have not been met “at present”. Commission president Ursula von der Leyen made this clear on Monday. The Belgian government is currently preparing support for vulnerable groups.
On Monday morning, the Commission discussed measures that could be taken to limit the impact of the war in the Middle East on the European economy. Next week, in the run-up to an informal summit of heads of state and government in Cyprus on 23 and 24 April, it intends to present a concrete plan.
Von der Leyen wants, among other things, to discuss with the member states a relaxation of European state aid rules. She did, however, emphasise once again that member states wishing to support vulnerable families and sectors should opt for “swift, targeted and temporary” measures.
“Broader economic interventions must be kept to a minimum to avoid an unnecessary deterioration in public deficits,” warned Von der Leyen. The Commission could propose to member states that European rules on budget deficits be suspended, as was done during the COVID-19 crisis, but she said this is not currently on the agenda.
“At present, the conditions for activating alternative measures, such as the general escape clause or national escape clauses, are not met, but we will of course continue to fulfil our important coordinating role with a view to the broader interests of the European Union,” stated Von der Leyen.
The Commission emphasises the importance of coordination. For example, it wants to prevent member states from outbidding one another to replenish gas stocks, and it wants to coordinate the release of strategic oil reserves to have the greatest possible impact. The Commission is also considering measures to reduce energy demand.
Belgian measures
In Belgium, MR has been calling for measures to reduce fuel prices at the pump via a fiscal mechanism whereby fuel excise duties fall when prices at the pump exceed a certain ceiling. At a core cabinet meeting earlier this month, the federal government did not approve that request, but did decide to prepare support for two target groups.
By 17 April, the government is preparing support for the most vulnerable households that heat their homes with fossil fuels and employees who use their own cars for commuting. These measures must, however, be temporary and expire automatically.
The government is also examining the budgetary impact of the higher prices on government revenue: according to experts, the higher VAT on fuel is entirely offset by higher costs, but the MR estimates that the state will generate an additional 60 million euros in revenue. A “complete and substantiated picture” of this is expected to be presented to the Council of Ministers on 17 April.
Energy minister Mathieu Bihet of the MR is also preparing measures to limit energy consumption, such as mandatory remote working or a lower speed limit on motorways. Bihet is also working on the tendering process for additional offshore wind energy and on maintaining nuclear capacity to the maximum extent possible.
European Commission president Ursula von der Leyen © PHOTO Nicolas TUCAT / AFP