# European governments spend half a trillion euros on energy crisis – report
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-21
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Europe's Nearly 500 Billion Euro Response to Soaring
Meta Description: Governments in Europe have set aside almost half a trillion euros to combat skyrocketing gas and power costs, with measures including subsidies and tax cuts.
URL: https://financedigest.com/european-governments-spend-half-a-trillion-euros-on-energy-crisis-reporthtml

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By Kate Abnett

BRUSSELS (Reuters) – Governments in Europe have earmarked nearly 500 billion euros in the last year to cushion citizens and companies from soaring gas and power prices, according to research published by think-tank Bruegel on Wednesday.

Months of surging prices have seen governments roll out measures to curb retail power prices, slash energy taxes and give subsidies to bill-payers.

European gas and power prices have rocketed as Russia has cut [fuel exports to retaliate for Western sanctions](https://www.financedigest.com/oil-spills-and-near-misses-more-ghost-tankers-ship-sanctioned-fuel.html "Oil spills and near misses: more ghost tankers ship sanctioned fuel") over its invasion of Ukraine.

The EU’s 27 countries have collectively allocated 314 billion euros for measures to ease the pain, while [Britain has set](https://www.financedigest.com/britain-sets-5g-goal-says-no-magic-number-of-operators.html "Britain sets 5G goal, says no ‘magic number’ of operators") aside 178 billion euros, according to Brussels-based Bruegel.

If the cash governments have earmarked to nationalise, bail out or provide loans to ailing energy utilities was included, then EU governments have spent closer to 450 [billion euros](https://www.financedigest.com/eu-seeks-clarification-on-italy-post-covid-plan-freezes-19-billion-euros.html "EU seeks clarification on Italy post-COVID plan, freezes 19 billion euros"), the think-tank said.

Germany nationalised gas [importer Uniper on Wednesday and Britain capped the wholesale cost of electricity and gas for businesses](https://www.financedigest.com/the-importance-of-property-care-looking-after-your-business.html "The Importance of Property Care: Looking After Your Business").

Many of the measures were designed to be [temporary – but Bruegel said the state](https://www.financedigest.com/uk-brings-train-operator-transpennine-under-temporary-state-control.html "UK brings train operator TransPennine under temporary state control") intervention has ballooned to become “structural.

This is clearly not [sustainable from a public finance](https://www.financedigest.com/the-rise-of-esg-experts-in-sustainable-finance.html "The Rise of ESG Experts in Sustainable Finance") perspective,” said Bruegel senior fellow Simone Tagliapietra.

Governments with more fiscal space will inevitably better manage the energy [crisis](https://www.financedigest.com/europes-spend-on-energy-crisis-nears-800-billion-euros.html "Europe’s spend on energy crisis nears 800 billion euros") by outcompeting their neighbours for limited energy resources over winter months.

Germany, the EU’s biggest economy, is by far the biggest spender in the bloc – setting aside 100 billion euros, versus 59 billion euros in Italy, or 200 [million euros](https://www.financedigest.com/germanys-merck-to-invest-300-million-euros-in-us-gas-plant.html "Germany’s Merck to invest 300 million euros in US gas plant") in Estonia, for example.

Croatia, Greece, Italy and Latvia have all earmarked more than 3% of their GDP to tackle the [energy crunch](https://www.financedigest.com/belgium-supports-energy-price-caps-suspending-trading-in-eu-power-crunch.html "Belgium supports energy price caps, suspending trading in EU power crunch").

The EU last week [proposed bloc-wide measures to respond to sky-high energy](https://www.financedigest.com/eu-will-propose-windfall-levies-on-energy-firms-von-der-leyen-says.html "EU will propose windfall levies on energy firms, von der Leyen says") prices, in a bid to overlay the patchwork of national responses with a coordinated reaction.

(Reporting by Kate Abnett; Editing by Alex Richardson)


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