Europe faces an unprecedented energy crisis that requires extraordinary policy action, such as a possible 100 billion euro in relief funds to businesses hit the hardest by soaring energy prices.
Bloomberg cites MF daily that said the European Union is considering a massive 100 billion euro bond issuance for a new relief program that would provide relief funds to businesses hit hardest by rising gas and electricity prices, as criticism soars about out of control commodity inflation and the bloc’s inability to tame prices.
MF didn’t cite sources, though it said the issuance could be approved within the next 15 days.
The news comes as the European Commission has proposed a plan to make Europe independent from Russian fossil fuels following the invasion of Ukraine.
Even before the invasion, many European countries were facing extraordinarily high natural gas, electricity, and fuel costs.
There’s even risk of a diesel shortage emerging. The latest developments from Ukraine have exacerbated the situation.
On Tuesday, a working group of Germany’s coalition parties agreed on a relief package to strengthen Germany’s energy independence and help alleviate the burden of high energy costs sources, told Reuters. This comes as Europe’s biggest economy is attempting to decouple from Russian gas and oil due to the invasion of Ukraine.
Italian Premier Mario Draghi recently said the invasion of Ukraine had sparked high volatility for the markets for commodity markets, which were already at elevated prices before the conflict. He said, “We must intervene right away.”
Spanish Prime Minister Pedro Sanchez said, “committing ourselves to diversify energy sources as fast as possible” is necessary. He said “small businesses and citizens can’t bear” soaring gas and electricity costs.
European politicians are awakening to the fact that high energy costs could “re-awakening the nightmare of populism” on the European continent, Greek Prime Minister Kyriakos Mitsotakis warned.
That’s why the European Union is likely to pass some kind of energy relief package for businesses and households in the near term.
Source: Oilprice.com