Portugal is pulling the fiscal emergency brake. The country has begun utilizing the EU’s national safeguard clause to cover energy-related costs, a mechanism previously reserved for defense spending, as a projected energy price shock tied to the Middle East conflict and Iran threatens to blow a hole in government budgets.
From April through May 2026, Portugal allocated roughly €450 million in targeted energy relief measures. Back in March, Portugal’s energy minister warned the country was approaching the criteria needed to formally declare an energy crisis, which would unlock even broader state aid provisions under EU rules.
What the safeguard clause actually does
The safeguard clause grants member states temporary flexibility to exceed normal deficit limits for specific, crisis-driven expenditures.
During the 2022-2023 energy crisis, Portugal and Spain pioneered the so-called Iberian exception, which capped wholesale gas prices. That mechanism was later extended under EU emergency rules. The current discussions from May 2026 include proposals to expand the safeguard clause further, formally incorporating energy spending alongside the defense carve-outs that were already in place.
