EU to propose 40b euros fund to mitigate energy price fallout
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THE European Union (EU) plans to propose using as much as 40 billion euros (S$56 billion) from the bloc’s budget to support people and companies struggling to cope with high prices caused by the energy crisis.
The European Commission, the EU’s executive arm, will offer governments the ability to tap existing cohesion funds to support small- and medium-sized companies affected by the price hike of gas and electricity and to help vulnerable households pay their energy bills through national programmes, according to a draft of the proposal seen by Bloomberg.
The plan would be part of the package of proposals the commission will unveil on Tuesday (Oct 18) to address the high energy costs fuelled by Russia’s invasion of Ukraine. EU leaders are expected to discuss the new set of measures at an Oct 20-21 summit in Brussels.
The new mechanism would utilise flexibilities under the cohesion policy to provide support to those affected by the energy price increases, according to a commission official familiar with the plan who spoke on the condition of anonymity.
New instruments
EU member states have earmarked more than 500 billion euros to cushion the impact of the energy crunch on consumers and businesses. In addition, the commission and governments are discussing new instruments to address the energy crisis since there is no common agreement on how to finance the new spending.
The plan to use existing cohesion funds would also include providing support for access to the labour market by protecting the jobs of employees and the self-employed through short-time work and other similar schemes, according to the draft document, which is still subject to change.
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The additional flexibility given by the EU´s executive arm to member states will mimic the decision taken during the Covid-19 crisis to cope with the pandemic and in the aftermath of Russia’s invasion of Ukraine to support fleeing refugees in EU territory. The final figure available per member state would depend on the volume of cohesion funds that remains uncommitted by the national government. BLOOMBERG
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