European governments have spent half a billion euros on the energy crisis – report

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European governments have earmarked almost 500 billion euros in the past year to protect citizens and businesses from rising gas and electricity prices, according to a study published on Wednesday by the Bruegel study center.

Months of rising prices have prompted governments to take action to lower retail electricity prices, cut energy taxes and provide taxpayer subsidies. 

Gas and electricity prices in Europe have soared as Russia cut fuel exports in retaliation for Western sanctions over its invasion of Ukraine. 

The 27 EU countries have collectively allocated 314 billion euros to measures to ease the spikes, while the UK has set aside 178 billion euros, according to Brussels-based Bruegel.

If you include the money that governments have spent to nationalise, bail out or lend to struggling energy companies, EU governments have spent about 450 billion euros, according to the think tank.

Germany on Wednesday nationalized gas importer Uniper (ETR: UN01 ) and the UK capped the wholesale cost of electricity and gas for businesses.

Many of the measures were designed to be temporary, but Bruegel said state intervention has escalated to “structural.”

“It is clear that this is not sustainable from the point of view of public finances,” said Simone Tagliapietra, a member of Bruegel.

“Governments with more fiscal capacity will inevitably better manage the energy crisis by competing with their neighbors for limited energy resources during the winter months.”

Germany, the largest economy in the EU, is by far the biggest spender in the bloc: it reserves 100 billion euros, compared to 59 billion in Italy or 200 million in Estonia, for example.

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Croatia, Greece, Italy and Latvia have allocated more than 3% of their GDP to deal with the energy crisis

Last week, the EU proposed bloc-wide measures to tackle skyrocketing energy prices, in an attempt to overlay the patchwork of national responses with a coordinated reaction. 

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