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EU urged members for large energy subsidies.

Brussels EU building
Brus­sels has urged EU coun­tries to start phas­ing out big energy sub­sidies as it pre­pares to reim­pose budget rules three years after the coronavirus pan­demic broke out. The European Com­mis­sion yes­ter­day set out its plan for the return of the Sta­bil­ity and Growth Pact, which was sus­pen­ded at the start of the pan­demic in 2020 as EU gov­ern­ments spent huge sums sup­port­ing their eco­nom­ies and provid­ing health­care. Rising energy prices as Rus­sia cut gas sup­plies after its inva­sion of Ukraine last year promp­ted mem­ber states to provide sup­port to people and busi­nesses strug­gling to pay their bills. But the com­mis­sion said the meas­ures should be unwound as the cost of energy drops and defi­cits need to be cut.Gov­ern­ments spent 1.2 per cent of EU gross domestic product in 2022 on energy sub­sidies and plan to spend 0.9 per cent in 2023, its fig­ures showed. «As energy prices head lower, we should move to phas­ing out most of the sup­port meas­ures, start­ing with the least tar­geted,» said Valdis Dom­brovs­kis, exec­ut­ive vice-pres­id­ent at the com­mis­sion. The com­mis­sion con­firmed that the gen­eral escape clause, which sus­pen­ded enforce­ment of the SGP, would be «deac­tiv­ated» at the end of this year. Under the pact, coun­tries are meant to limit budget defi­cits to 3 per cent of GDP and bring debt ratios to 60 per cent of GDP or below.

Gen­ti­loni said fiscal rebal­an­cing «should not be achieved by cut­ting invest­ment but by lim­it­ing the growth of cur­rent spend­ing» given the need to fund green energy projects.

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