The number is confusing. In one year, the cost of living in Europe has increased by 7.8% compared to March 2021, reports the harmonized consumer price index of the European Union. Even within European borders, countries are hit even harder by inflation. The Netherlands have to deal with inflation of almost 12%, Spain and Slovakia almost 10%, the United Kingdom, which announced several measures on Thursday May 26, 9%. France (5.1%) and Italy (7.5%) are more spared. If the Member States are not affected to the same degree, does the variation in the indicators result from the economic and monetary policy of each nation?
Difficult to measure it. Be that as it may, European countries have not mobilized the same levers to mitigate the effect of soaring prices on consumers. Aid for the most vulnerable, temporary tax reduction and pressure on the price of fuel… Devices come together by the similarity of their principles while differing in the outlines of their application. This is what the economists Giovanni Sgaravatti, Simone Tagliapietra and Georg Zachmann studied in a article, for the Bruegel Institute, published on May 11. Their work provides an overview of the policies implemented on the continent. A tour of Europe of national responses to the vertiginous rise in the price of petrol, packets of pasta and even coffee.
- In France, actions in favor of purchasing power
The French government wanted to be proactive on the subject of inflation. From September 2021, it announces the distribution of a check for 100 euros to the 5.8 million households already receiving the energy check. The device will be extended to a larger number in stride. The price of fuel is capped until the end of 2022. Actions that will cost the State 3.8 billion euros, according to the Ministry of the Economy.
A little later, EDF was forced to sell 20% of its electricity volumes to its competitors. The measure ensures a preferential purchase price for alternative producers. On March 19, 2022, the Prime Minister, Jean Castex, announced that motorists will be able to benefit from a discount of 15 cents per liter at the pump between April and July (35 cents per liter for diesel used by fishing boats). Road hauliers are also targeted since they benefit from a subsidy of 400 million euros from the executive. In the middle of the presidential campaign, all of these measures have a specific objective: that inflation does not rub off massively on purchasing power.
- Energy bill, food… Spain goes far
Due to its low electrical interconnection with the rest of the European continent, Spain, a country led by Pedro Sanchez, has chosen to extract gas and electricity prices from European mechanisms. After a month of discussions with the members of the European Union, he can dissociate the formation of the price of electricity from that of gas. It is agreed that Spain can, domestically, reduce the price of gas used to produce electricity and reduce household energy bills.
A step aside that Portugal followed. “This Iberian exception” allows Spain to respond to soaring energy prices which had led to galloping inflation feeding social discontent. Spain has also been on the offensive when it comes to food. To ensure the fair distribution of food, the government has authorized supermarkets to limit the number of products purchased per consumer. A unique measure in Europe.
- Germany wants to reduce the weight of energy
Germany is probably the European country most dependent on Russian gas. Moscow’s entry into the war against Ukraine therefore does not help Berlin’s economic affairs. As for the rest of European countries with the exception of Hungary and Bulgaria, the country has put in place targeted measures to help vulnerable households pay their electricity bills and fill the shopping cart. 130 million euros in subsidies have been released for low-income households. They will be paid during the summer when households receive their energy bills.
Before that, the German power had agreed to a tax reduction at work from April until June aimed at countering the rise in fuel prices. Among the other measures taken: a check for 100 euros to increase alimony and a monthly reduction for public transport up to 9 euros.
- In the United Kingdom, disadvantaged households in the line of fire
In line with measures taken by the rest of Europe, the British government has designed a £500 million fund to help the most vulnerable people pay their energy bills and cover their food expenses. To go further, British Finance Minister Rishi Sunak on Thursday unveiled a new 15 billion pound aid package to deal with the impact of the cost of living on disadvantaged households. This aid, which will cost the state 22 billion pounds, will have to bring in at least 1,200 pounds per household, the British Treasury promised in a press release.
A tax on energy giants has also been announced. A measure to which Boris Johnson had been opposed for several months, for fear of discouraging investment in the ecological transition. This did not fail to raise the laughter of the Labor opposition, which sees in these recent announcements a political scheme on the part of the British government, a few days before the publication of the report on the multiple watered parties in Downing Street, during confinement.
- Malta, Hungary… Countries that do the bare minimum
Despite an economic shock that is being felt across the continent, the governments of Malta and Hungary are failing to tackle the consequences of the war in Ukraine. The Hungarian Prime Minister announced one and only measure: a ceiling price of 1.30 euro per liter of petrol and diesel. It will last three months.
It is in the energy sector that Malta has chosen to act. While compensating him, the government demanded that the public energy supplier, Enemalta, freeze energy prices at 2014 levels. In 2021, 200 million euros had been committed to deal with inflation . An envelope renewed in 2022.