Eurozone to discuss economic stimulus amid soaring energy prices

Eurozone finance ministers plan to meet on Monday, Nov. 7, in order to debate on supporting the economy in the context of rising energy prices. Reducing uncertainty over a budget allocation for 2023 may also be on the agenda, so that effective measures can be taken in view of a looming recession. 

In September, Germany has already triggered controversy among its European counterparts by announcing a support plan for households and businesses valued at up to 200 billion euros. These actions, as critics said, undermine the principles of fair competition in the EU market. Other countries also followed this move by introducing support programs, although the size of the aid provided remained far smaller. 

These fiscal stimulus mechanisms are not only adding more public debt in the 19 Eurozone countries, but also hampering the European Central Bank's (ECB) mission to fight inflation that reached an annualized rate of 10.7 % in October.

Therefore, the finance ministers agreed that state aid should be targeted and temporary. However, numerous programs failed to be implemented.

European officials believe that the best option would be for the government to provide a fixed amount of energy to consumers at a subsidized price. Meanwhile, excess consumption should be paid at a higher market price.

These principles are intended to ensure fair competition between the Eurozone economies, as well as to contribute to effective budget planning for the next year. 

Officials said that the economic downturn expected in early 2023 is likely to intensify fiscal pressures on government spending. This would happen even if energy demand drops due to inflationary pressures weakening.