Meloni Seeks Brussels' Help on Energy Price Shock

Italian Prime Minister Giorgia Meloni is pushing Brussels to grant her country fiscal leeway as energy prices continue to soar. In a letter to European Commission President Ursula von der Leyen, seen by Euronews, Meloni argues that EU fiscal rules are becoming increasingly restrictive amid rising inflation.

The prolonged Middle East crisis has left European energy markets 'extremely tight,' with oil prices up almost 80% and gas up to 156%. Against this backdrop, the agreed net expenditure paths under the European fiscal framework leave limited room to alleviate the impact on households and firms without resorting to tightening measures at a time of significant downside risks for the economy.

Meloni notes that governments are collecting more tax revenue due to higher prices, but EU fiscal rules make it difficult to recycle that windfall into temporary energy support. The Italian leader is asking Brussels to recognize that some additional spending is not the result of governments choosing to spend more, but of inflation mechanically increasing existing obligations.

Meloni wants the Commission to find a way to allow at least part of those additional revenues to be used for 'temporary and targeted measures' to reduce the impact of high energy prices. The EU's fiscal framework sets national spending limits in nominal terms, meaning governments cannot simply raise expenditure when inflation comes in significantly above initial forecasts.