Euro zone bill for cost of living crisis nears 300 bln euros

The amount of money euro zone governments are committing to help consumers and businesses cope with the energy and cost-of-living crisis is quickly approaching 300 billion euros.

According data compiled by Reuters and think tank Bruegel, the bloc’s governments have already committed 282 billion euros – 2.3% of their combined gross domestic product – to relief measures and several have plans for billions more in the pipeline.

The following is a breakdown of the fiscal packages in the bloc.

The government presented on Sept. 4 a third package worth 65 billion euros, bringing its total to 95 billion since February.

It includes benefit hikes and a public transport subsidy and is to be financed with a tax on power companies and by bringing forward Germany’s implementation of the planned 15% global minimum corporate tax.

The finance ministry estimates measures taken since last year will cost 67 billion euros, including 24 billion euros to cover gas and electricity price caps and subsidised rebates on vehicle fuel.

Extra spending this year has been covered by better-than-expected tax income, which has allowed to the government to stick with its target for a budget deficit of 5% of GDP.

The Italian government has so far committed 52 billion euros and flagged plans for a new multi-billion euro package which one source told Reuters could be worth at least 10 billion euros.

Outgoing government has financed his packages with increased revenue from value added tax on higher energy costs and by adjusting other areas of the state budget.

The government has refused to hike this year’s fiscal deficit above an April target of 5.6% of GDP.

The Spanish government says it has mobilised over 30 billion euros. That includes a first package worth 16 billion euros in March made up of direct aid and subsidised loans and a second 9 billion euro package in June targetting people in low incomes with pension increases as well as subsidies for rail and bus transport.

To limit the impact on the budget deficit, Madrid aims to partially offset the cost with a temporary tax on banks and large energy companies.

The government has offered general tax breaks and targeted support for low-income households at a cost of over 6 billion euros. It is preparing a further 16 billion euros in measures for next year, including a 10% increase in the minimum wage and higher income-related subsidies for health care and rent, which will mostly be paid for by hiking wealth and corporate taxes and a special levy for oil and gas companies.

The government says it expects spending more than 10 billion euros to help households, which it hopes can be offset with record tourism revenues in order to maintain its fiscal target for a primary deficit of 2% of GDP.

The government announced a 6 billion euro package in June, which includes increased benefits to vulnerable groups and subsidies for energy-intensive companies. The measures are due to push the budget deficit to 4% of GDP.