You help, yes, but in moderation. The European Commission has given a ‘touch’ to ‘the Twenty-seven’ to limit the measures of . Especially regarding reductions in taxes on fuel and electricity rates.
Brussels fears that the current war and socioeconomic crisis in Iran and throughout the Gulf could give rise to something else, the third global crisis in the last six years, a period in which those caused by the coronavirus and the Russian invasion of Ukraine have already been experienced and endured.
As , the European Commission calls for “coordination and caution” when national governments adopt their response measures to alleviate rising prices. Basically, for fear of a bigger problem than the current one.
If days ago it was the entity itself chaired by Ursula von der Leyen that was doing so, now the EU is slowing down somewhat.
The European Commissioner for Energy, Dan Jørgensen, acknowledges that the Commission has provided “technical advice and help” so that EU members “could develop the political instruments and tools that they wish to use… within the fiscal space available to them.” This last question is key, because massive tax cuts are something that the European Union rejects.
Both the Commissioner and the entire Commission are aware that the war in Iran and its effects on nearby countries “has an enormous risk, unfortunately, of causing higher inflation, with all the negative consequences that this entails.” But they put an asterisk that Christine Lagarde, president of the European Central Bank, has openly verbalized.
Although Lagarde made it clear that “specific government policies can help mitigate the impact by reducing energy demand and compensating low-income households,” she admitted, however, that if they became “generalized and indefinite” they could be counterproductive, as they could “excessively” boost demand and thus generate inflation.
For this reason, the top leader of the ECB – and, incidentally, the entire European Commission – have made clear their recipe for overcoming the crisis in an acceptable way: “temporary, specific and adapted to each case” actions.
The European Commissioner for the Economy, Valdis Dombrovskis, recently expressed himself along these lines. Von der Leyen’s economic right-hand man fears that excessive spending to significantly lower the tax burden would have “serious fiscal consequences” due to the reduced room for maneuver as a result of the pandemic, the response to the invasion of Ukraine and the increase in defense spending.
“Our emphasis… is that we have limited fiscal room for maneuver, so any measures taken by Member States must be temporary and specific,” Dombrovskis made clear.
