European capitals have failed to take targeted measures to protect suffering households and businesses from soaring energy prices, International Monetary Fund deputy director Helge Berger said, urging member states to focus on concrete solutions.
“Most governments are adjusting energy prices one way or another, and that’s not what should be done at all,” Euronews quoted Berger as saying. – So over time, if the situation does not change, we should act in a more targeted way.”
The IMF criticizes the universal subsidies introduced by many EU members, which overburden the budget, and calls to take into account the lessons of the energy crisis in 2022.
Subsidies reduce incentives for alternative energy sources
Almost all members of the euro bloc have adopted at least one price-signaling distorting measure (price caps or tax cuts), which the IMF estimates reduces incentives to switch to alternative energy sources. And it is their growing share of the continent’s energy supply, Berger is convinced, that has given the EU greater resilience to crises today than it did four years ago.
According to the IMF, since the war in the Middle East began, oil prices have jumped about 70% and gas prices in Europe are 45% above pre-war levels. The price spike has been less severe than in 2022, but it too will have a major impact on economic growth, experts say.
In a similar vein, the EU authorities have previously expressed their views, urging member states not to let the energy crisis develop into a financial crisis. Moreover, normalization in the sector is not expected soon.
