The European Commission is set to allow limited energy-related spending from fiscal rules to give EU countries more leeway to address soaring prices.
The measures announced by the EU executive on Wednesday are an attempt to reassure fiscally conservative capitals struggling with skyrocketing energy bills that are threatening industrial production.
In particular, the relaxation is an indirect response to Italy's recent call for the bloc to treat the energy crisis as equivalent to a defence emergency. Italy has the second-highest debt-to-GDP ratio in the EU after Greece, limiting Rome’s room for large-scale subsidies under existing fiscal rules.
Italian Prime Minister Giorgia Meloni recently accused the EU of being a "bureaucratic giant" that "often sacrifices competitiveness and strategic approaches" in favour of "ideological and technocratic approaches". In a letter to the Commission, she threatened to withhold her backing for the bloc's financial tool to scale up defence investments and military readiness.
As a response, the Commission made a concession to EU countries that have already activated an EU rule that temporarily allows them to spend more money on defence without being penalised for breaking the bloc's standard budget and debt limits: they may now request that part of their fiscal flexibility also cover investments aimed at reducing their dependence on imported fossil fuels.
