The energy crisis will cost Europe at least €500 billion – this is the amount that the measures that the authorities of European countries have taken to counter the consequences of the crisis are estimated. This is reported by Bloomberg with reference to the estimates of the Belgian analytical organization Bruegel.
Analysts have calculated that at the moment the EU countries have allocated €314 billion for various measures to counter the crisis. This money will be used for tax and other benefits for businesses, as well as for compensation to the population. The UK is allocating €178 billion for similar measures. At the same time, Bruegel is confident that this level of spending is just the beginning, and the real costs of states will only grow as winter approaches.
“Initially conceived as a response to what was supposed to be a temporary problem, these measures have become bloated and structural. Spending will rise as energy prices remain high, clearly creating an unsustainable public finance problem,” said Simone Tagliapietra, an analyst at Bruegel.
The total expenditure is about 1.7% of GDP. At the moment, European countries are agreeing on a plan for the passage of the heating season, which includes an increase in taxes for energy companies and the redistribution of these profits in favor of affected industries and the population. It also includes power limits and the ability to direct shutdowns to reduce the load on the power grid. The final version of the document must be submitted on 30 September.
At the same time, the aggregate estimates did not include the costs, for example, of Germany for the nationalization of the largest energy company Uniper, which, after the cessation of Russian gas supplies, was on the verge of bankruptcy. Germany intends to spend €8 billion for these purposes. In addition to the growth of budget expenditures, Belgian analysts point to future risks of Europe's defragmentation into rich and poor countries.
“Governments with more fiscal space will inevitably cope better with the energy crisis by overtaking their neighbors for limited energy resources during the winter months. Therefore, it is important to develop policies that can ensure financial sustainability and coordinate them, especially between EU countries,” the analyst notes.
Nevertheless, the measures already taken by the European authorities have made it possible , if not to reduce, then at least to stabilize gas prices. The measures proposed by the European Commission, coupled with an increase in oil and gas supplies from sources alternative to Russia, helped to eliminate the panic in the market. However, the possibilities of some sources have been exhausted – for example, the United States is already at the limit of its ability to supply oil and gas to the EU.