The waiver does not cover energy subsidies to households and businesses that are impacted by rising fuel costs. It focuses on investments that EU countries have put in place since February, when the war started, to reduce their reliance on fossil fuels. These include investments in renewable sources of energy, such as solar panels or battery production.
The waiver is limited to investments worth 0.6 percent of GDP over three years until 2028, one of the diplomats said, but governments cannot spend more than 0.3 percent of GDP over a single year. This would allow heavily indebted governments to free up extra budget space to support citizens and companies from higher energy bills.
EU governments will have to formally apply for the waivers and pass them through the Council with a qualified majority.
Economic gloom
The Commission last week downgraded the EU’s growth forecasts on the back of the Middle East conflict. Highly indebted countries, such as Italy, are struggling to shield consumers from higher prices without falling foul of the bloc’s spending limits.
Italian Prime Minister Giorgia Meloni emphasized this point in a letter to Commission President Ursula von der Leyen, urging her to give EU capitals more budgetary flexibility to contend with the crisis. Meloni specifically called on Brussels to extend an existing waiver from EU fiscal rules for defense spending — amounting to 1.5 percent of GDP — to energy-related expenditure.
“Italy believes it is necessary to temporarily extend the scope of the National Escape Clause, which is already available for defense spending, to include energy-related expenditure and investment as well,” she wrote.
