The think tank Bruegel said a few days ago that the loss of the energy crisis to Europe has approached 500 billion euros ($496 billion).

The latest data released by Bruegel a few days ago shows that the 27 EU member states have so far allocated 314 billion euros to alleviate the impact of the energy crisis on consumers and businesses. Among them, Germany ranked first with 100.2 billion euros, followed by France and Italy, which allocated 53.6 billion euros and 59.2 billion euros respectively. In addition, the UK government has set aside 178 billion euros.

The spending reflects efforts by European governments to protect households and businesses from sky-high energy prices. Energy prices in Europe have been soaring since Russia cut off European gas supplies.

Yet even with so much government aid, the economic outlook remains grim. Analysts at BlackRock had previously warned that Europe would slip into a deep recession in early 2023, with the economy expected to contract by 0.9% by the end of the year. At the same time, the EU's fiscal burden is mounting as European countries grapple with accelerating inflation and a gloomy economic outlook.

EU ministers are negotiating an emergency plan that would pass on excess profits from energy companies to weaker households and companies. In addition, the agreement, expected to be reached on September 30, will also include targets for capping electricity prices and reducing electricity demand.

Simone Tagliapietra, a researcher at Bruegel, points out that the measures were originally designed as temporary responses, but have now become structural. As energy prices continue to rise, spending will increase. This is clearly not sustainable from a public finance standpoint. On the other hand, Tagliapietra also pointed out that the rising cost of the energy crisis could deepen economic divisions among EU member states.

“This level of intervention also poses the risk of a divided Europe: governments with more fiscal space will inevitably be better equipped to deal with the energy crisis by competing with their neighbours for limited energy resources in the winter. It is therefore important that Design policies that ensure fiscal sustainability and coordination, especially among EU countries," he wrote. Editor / Xu Shengpeng