The government’s economic team is preparing a new €200 million “injection” to support economically vulnerable households, as the crisis in the Middle East has not only failed to resolve but is instead intensifying, fueling the energy crisis.
The surge in prices for oil, natural gas, and other energy fuels has spiraled out of control, leaving a profound impact on the real economy and the daily lives of citizens.
The government, utilizing the unallocated budget of 200 million euros, is planning new measures, with a focus on fuel.
According to reports, the government is considering extending the across-the-board diesel subsidy for the month of June, while the fuel pass subsidy will likely continue as well.
Despite pressure from the market, the activation of the electricity bill subsidy (power pass) remains pending, in order to halt the rise in prices before they completely drain consumers’ pockets. However, the General Accounting Office has expressed reservations about this specific measure, despite the fact that funding could come from the Pollution Fund.
Revisions upon revisions
In any case, Brent crude oil prices continue to soar, remaining firmly above the psychological threshold of $100 per barrel. It is noteworthy that yesterday Brent futures rose to $114, while last week they even “touched” $126 per barrel.
And all this, when the downwardly revised estimates for growth and inflation, as reflected in the annual progress report of the Medium-Term Structural Plan, are based on the assumption that the price of Brent crude will settle at $89 per barrel this year—an assumption that, given current data, does not appear to be holding true.
Depending on developments in the international oil market, the government is prepared to continue supporting households by making full use of available fiscal space, beyond the €200 million “buffer” that allows for immediate interventions depending on the trajectory of international energy prices.
According to current estimates, the cost of extending the diesel subsidy for the month of June is estimated at approximately €40 million, while a two-month extension of the fuel pass for June and July is estimated to amount to €130 million.
Fears of a recession
The impact of the war in the Middle East was the focus of yesterday’s Eurogroup meeting. EU officials estimate that the crisis’s effects will be prolonged, even after hostilities in the Gulf end, affecting the global balance of energy supply and demand for a long time.
Significant pressures are already being felt in the macroeconomic environment, with accelerating inflation, deteriorating growth prospects, and increased uncertainty regarding the economic outlook in the eurozone, while fears of a recession are growing— a development that could affect European economies as a whole, including Greece’s.