The European Commission has decided to grant Member States additional fiscal flexibility to address the prolonged energy crisis caused by the war with Iran and the closure of the Strait of Hormuz, while setting clear “green” conditions for the use of the funds.
As announced by Economy Commissioner Valdis Dombrovskis, governments will be able to exceed fiscal targets by up to 0.3% of GDP annually until 2028, with a cap of 0.6% of GDP in total over the three-year period. The rule will apply retroactively to measures taken since February.
The Commission clarifies that the additional spending should strengthen the structural resilience of the European energy system and accelerate the transition away from fossil fuels.
In this context, eligible measures include support for electric vehicles, heat pumps, and other technologies that reduce the energy dependence of households and businesses.
The decision reflects growing pressure from countries such as Italy and Spain for greater flexibility, as Brussels’ initial measures were deemed insufficient in the face of the new energy crisis. However, as Bloomberg notes, the Commission’s message is clear: fiscal easing will not fund across-the-board fuel subsidies, but rather investments that serve the EU’s climate goals and permanently reduce dependence on oil and natural gas.