Debt-laden Europe - Less able to withstand energy shock
Rising energy prices caused by the US-Israeli war against Iran are putting European governments under pressure to help households and businesses, but strained finances in some major economies mean their power is limited.
France, Greece and Poland have imposed fuel price caps, profit margin caps and rebates, measures that come at little cost to the public purse, while Germany also wants to regulate retail prices. But these countries may need to do more in this regard.
Analysts believe that, if there is a disruption of gas supplies from Qatar for several weeks and prices rise, European governments could step in and restore some subsidies.
Britain has said it is too early to freeze fuel tax, while the French government has rejected opposition calls to cut VAT. Italy is considering using VAT revenue generated by higher prices to finance a cut in fuel excise duty.
The difference from 2022 is that the COVID-19 pandemic and the ensuing energy crisis have left budget deficits in all European economies almost 3 percentage points higher than in 2019.
Economic growth is weaker than four years ago and interest rates are higher, while European governments are already increasing defense spending. Germany is increasing borrowing for a massive stimulus plan.
Even as oil prices rose by $120 this week, approaching their 2022 peak, Europe’s energy situation is not the same as it was in 2022. Gas prices have risen by more than 50% since the start of the war, but are only a sixth of the levels of over 300 euros per megawatt hour they reached then. And Europe is in no rush to replace a single supplier, as it did with Russia.
But if high prices persist and governments need to provide support, it could add to fiscal pressures in France and Britain, given their high budget deficits. Given the limited room to act, support measures, which governments kept broad in 2022, will need to be limited and more targeted this time, Barclays economists said.
If the Strait of Hormuz remains closed for more than a month and there are signs that growth is weakening, the EU could allow some countries to temporarily deviate from the rules, Morgan Stanley said, expecting them to spend up to 0.6% of output per year to finance targeted measures.
EBRD, 15 million euros investment in Montenegro - Sovereign guaranteed loan to strengthen regional energy connections
The European Bank for Reconstruction and Development (EBRD) is providing a loan of up to €15 million to the electricity transmission system operator of......
Edi Rama: Justice reform cannot be reversed, Albania has no plan B other than EU integration
Prime Minister Edi Rama has reacted on the X platform regarding the statements of the embassies of the United Kingdom and Germany, made following the......
Energy, how dependent are we on imports? Albania, among the countries with the lowest energy dependence in the region
Data from the European Statistical Agency (Eurostat) on energy import dependence show that in 2024 Albania imported 27.3% of the energy it consumed. When......
Will plane tickets become more expensive? - Vathi: Reservations in some destinations have dropped by up to 80%
Recent unrest in the Middle East and uncertainty in the Strait of Hormuz have raised fears of a possible increase in airfares due to rising oil prices. But......
New pensions, calculation changes - ISSH approves indexation coefficients, 40 thousand citizens benefit
Around 40,000 citizens who will apply for new pensions from January 1, 2026, will have monthly income calculated with indexed coefficients. The......
How will the compensation of contributions for companies be made? - Decision/ 9 months subsidy for the depreciation of the minimum wage. Applications start on April 1
The government will provide financial compensation each month, for the contribution period January-September 2026, for employer social and health insurance......
A liter of diesel decreases by 5 lek - OBSERVATION / It reaches 193 lek per liter, 18 lek more since the start of the US-Iran conflict
The price of oil has decreased by 5 lekë in the retail fuel markets, a day after the change in prices on international exchanges. According to a TV SCAN......
"Air pollution, beyond the norms" - Alternative report, Bejko: 98.3% of monitoring points result above the norm for CO₂
The alternative monitoring of air quality, noise pollution and water quality carried out during 2025 highlights worrying data regarding the state of the......
