Petru Sorin Dandea from the European Economic and Social Committee (EESC), explores the support available for consumers and businesses in light of the energy price crisis
The European Commission’s communication regarding the Council Recommendation on the economic policy of the euro area launched in November 2022, along with the other documents from the autumn package, was received with keen interest by the representatives of civil society within the EESC.
The autumn package took on particular significance given that the European Union is going through the most complex period of crisis since its establishment. The pandemic, the energy crisis, the high level of inflation and Russia’s war against Ukraine have generated major challenges for the European institutions and the Member States.
In drawing up the EESC’s opinion on this communication, we formulated a series of proposals for the Commission, but also for the Member States, which we hope will improve the proposed policies.
Proposals for the Commission on the energy price crisis
First of all, we suggested that the two-tier energy pricing policy be used to protect households in general, not just the vulnerable ones, because the huge energy prices have strongly affected their budgets.
With reference to businesses, to prevent the shutdown of their activities, the EESC backs the Commission’s proposal that Member States should make use of the State Aid Temporary Crisis Framework and urges them to use all possible means to help businesses in general and small and medium-sized enterprises in particular through the energy price crisis.
European gas deposits fuelled the crisis
Without denying Russia’s responsibility for the current energy crisis and the inflation generated by it, we must recognise the mistake made by the Commission and the Member States when last spring they publicly announced the decision to fill European gas deposits until September. The storage capacity in Europe represents approximately a quarter of the annual consumption. Being sure of an increase in orders, the companies in the natural gas market increased their prices, which reached almost EUR 400 /Mw at the end of August. In October, the Council approved a regulation that allows Member States to tax surplus profits of companies in the energy and fossil fuel sectors.
But the damage was done. Because the price of energy is ultimately found in the price of any product or service on the market, inflation rose to over 10% in the euro area in November. And in many Member States inflation has risen to between 15 and 22%.
Enabling the European Central Bank to settle inflation
The European Central Bank uses its monetary policy tools to keep core inflation under control. As the inflation recorded in Europe has largely been influenced by the accelerated increase in the price of fossil fuels and energy, the EESC has recommended the prudent use of monetary policy, because this, due to the context, can become a cyclical policy. As the majority of European businesses are financing themselves using loans, any increases in interest can add to the burden they already face due to inflation.
The EESC recommends that long-standing political projects such as the Capital Markets Union and the Banking Union be completed urgently to increase the resilience of the single market. For example, if European businesses could finance themselves in the same way as their American partners, using the capital markets instead of loans, they would be less threatened by inflationary shocks such as the current one.
Lightening the burden for households and businesses must remain the key objective and, at this time of multifaceted crises, Member States must take action to reduce the negative fallout and involve the social partners in the design and implementation of effective policies through social dialogue.
