Filenews 5 June 2022 - by TheanoThiopoulou
Extraordinary, horizontal and targeted measures were taken and are being taken by European governments, including the Cypriot one, in order to support vulnerable households and businesses against the price rises, which began during the pandemic and peaked after Russia's invasion of Ukraine. Consumers across Europe have been feeling from mid-2021 until today the large price increases in the prices of electricity, gas, fuel and almost all commodities on the shelves of supermarkets. No one can now safely predict what the sequel will be and how long the wave of rises will last.
The governments of many states since March, shortly after Russia's invasion of Ukraine, were quick to announce measures to relieve citizens and businesses affected by the rapid rise in energy and fuel prices. Horizontal measures, such as the temporary imposition of a ceiling on energy prices or even reductions in taxation and excise duty, have been decided by several European countries, such as France, Spain, Poland and Belgium, in response to the wave of rises. The relief measures implemented by European governments are adjusted according to the rise in prices, the seasons (temperature and seasonal needs). This text presents the most recent measures implemented by the Member States.
In addition to the tax part of the measures or the payment of lump sums to support vulnerable households, measures with an ecological background are also implemented or promoted, e.g. for energy saving. For example, the European Union's recommendation to reduce energy consumption has been launched by some states, with energy-intensive air conditioning as a priority.
For example, the governments in Italy and Spain have decided to recommend or enforce that the use of air conditioners in public buildings in the summer be done in moderation and up to a certain temperature, otherwise a fine will be imposed. Spain will also encourage civil servants to work from home and limit the use of air conditioning in public buildings in order to reduce energy consumption.
What they are doing now
France: Tackling high inflation is at the top of the political agenda of the Macron government, which has promised a new round of measures against inflation. France has also managed so far to keep inflation lower than the rest of the EU countries (except Malta), thanks to a €25 billion package of measures, which has largely set limits on gas and electricity prices.
Italy: Mario Draghi's government recently decided to take new measures against fuel prices. In particular, urgent measures on excise duties and VAT were adopted. At the beginning of May, the Italian government approved a package of measures reaching €14 billion to support the country's households and businesses. The Draghi government also approved a €200 bonus for 28 million workers and pensioners, with an annual income of no more than €35,000. In Italy, the "thermostat business", as it was called by the Italian media, predicts that air conditioning in public buildings, including schools and government agencies, ministries, etc., cannot be set below 27 degrees Celsius during the summer months. In winter, heating systems should not heat buildings above 19 degrees, although 2 degrees more will be allowed in special conditions. For offenders, fines ranging from €500 to €3,000 are foreseen. By reducing the operation of air conditioning, the government plans to save 4 billion cubic metres of gas this year. The measures will last until April 2023.
Spain: In May the Spanish cabinet approved a plan that includes temperature checks in public offices, mass installation of solar panels on rooftops of public buildings and will encourage workers to work longer at home. In the summer, air conditioning in offices/ workplaces should not be set lower than 27 degrees Celsius. In winter, heating should not be more than 19 degrees Celsius. The plan also encourages public service workers to use public transport or bicycles to get to work and also provides for the lights to be switched off earlier in public buildings. Spanish officials said the measures are aimed at a 25% reduction in energy use by the central administration.
Germany: From 1 June in Germany, a monthly ticket of €9 for urban and interurban transport by metro, bus, tram, regional trains, applies throughout the country. Only ultrafast ICE (Intercity Express) are excluded. The single ticket of €9 will be applied for three months and is part of the package of relief for citizens from energy price rises and soaring inflation. It is estimated that thirty million tickets will be sold in June, July and August. A second measure is the "tank discount", the reduction of taxation on diesel and petrol. The aim of the measure is to keep the price of fuel below €2. The tax rate for petrol is reduced by 29.55 cents per litre, for diesel by 14.04 cents.
Belgium: It reduced the value added tax on electricity from 21% to 6% from March 1 to July 1, and every household will have a €100 discount on their electricity bill in the winter of 2022. Also, in the targeted measures announced by the Belgian government is an €80 one-off payment to households that meet social criteria.
Denmark: The Danish government has decided, among other things, to subsidise 3,750 kroner (€504) to about 320,000 households for energy bills. Funding schemes for the rapid replacement of a gas heating system were also announced.
Greece: Greek Prime Minister Kyriakos Mitsotakis announced new measures to support citizens against energy rises. These are measures that include the following: The return to the individual bank account of each owner or tenant of a first home, with an annual income of up to €45,000, of 60% of all additional charges on the electricity, retroactively from December to May. The limit of compensation will be €600. Based on the final finding of the Independent Regulatory Authority for Energy, the additional short-term revenues of power generation companies will be taxed at 90%. These proceeds will be donated to relieve Greek households and businesses. The Greek government has been launching, since July, a system that disconnects international gas increases from the country's electricity bills. This sets an indirect ceiling and stabilises the prices that reach the consumer. This effectively suspends the readjustment clause and cuts a "knife" of the energy companies' super-revenues.
€300 million package of measures in Cyprus
In Cyprus, the government has already taken targeted measures, which it announced through two packages of measures amounting to a total of €300 million. The last package of 11 measures, amounting to €103 million announced by the Minister of Finance two weeks ago, focuses on five pillars - the support of pensioners, vulnerable groups of the population and the renewal of the measures that are already in operation concerning electricity and fuel. The last pillar is support measures for farmers and stockbreeders. The government in the form of urgency passed last Thursday a bill to extend the reduction of excise duty on fuel. The bill concerns the temporary, and for a fixed period until 30/9/2022, reduction of excise duty rates for the purpose of alleviating the economic costs borne by consumers and businesses, as one of the eleven measures promoted to mitigate the effects of the ongoing Ukrainian crisis.
Inflation hit before the war
The energy crisis in Europe began to show its teeth from mid-2021 and triggered an uncontrollable inflationary domino effect that threatened economies, businesses and households. The European Union was initially monitoring, in the hope that there would soon be an automatic de-escalation and normalisation of energy prices. Brussels until the end of 2021 refused to take meaningful measures for the crisis, hoping that inflation would be transitory, leading households and businesses in Europe to face high electricity and gas bills, the cost of which was eventually transferred to other key items of consumption. The great upsurge in accuracy was recorded after the Russian invasion of Ukraine and the West-Russia energy war that followed.
