European Commissioner for Economy Valdis Dombrovskis announced on Friday that the European Union is examining the use of “existing flexibilities” within its fiscal framework to respond to the ongoing energy crisis. Speaking after a euro area finance ministers’ meeting in Cyprus, Dombrovskis told journalists that the Commission is assessing policy options, including fiscal measures, to best address the situation.
The statement follows a letter sent on Monday by Italian Prime Minister Giorgia Meloni to European Commission President Ursula von der Leyen, calling for greater budgetary leeway to manage soaring energy costs. Italy’s Economy and Finance Minister Giancarlo Giorgetti raised the issue again during Friday’s Eurogroup meeting. According to an EU official, while the proposal did not spark an extended debate, several ministers referenced Italy’s request, though not all spoke on fiscal flexibility, indicating a lack of consensus.
Divergent Views Among Member States
Eurogroup President Kyriakos Pierrakakis acknowledged the differing positions during the press conference, noting that unified support for the proposal is currently absent. The exchange reflected the range of views across the bloc, with some member states cautious about expanding fiscal space.
Dombrovskis emphasized that any measures must preserve fiscal sustainability, signaling openness but with caution. European Central Bank President Christine Lagarde, who participated in the discussions, reiterated a similar stance. “I underlined that fiscal measures should comply with what I call the triple T principle: temporary, targeted and tailored,” Lagarde said. “Any deviation from these principles would be counterproductive and could lead to a different monetary policy stance.”
The EU is also exploring broader economic impacts of the Middle East conflict, including rising energy prices affecting households and industry. The European Commission’s economic forecasts, published on Thursday, project average growth of 0.9% in 2026 and 1.2% in 2027—a weaker outlook compared to earlier predictions. Pierrakakis noted that while inflation faces renewed pressures, it is not at the extreme levels seen in 2022.
Rising energy costs are prompting some European governments to reconsider energy sourcing. The UK government issued an open-ended licence on Tuesday allowing imports of diesel and jet fuel made from Russian crude oil refined in third countries like Turkey and India, where oil is purchased at discounted prices. Meanwhile, Hungarian Prime Minister-elect Péter Magyar stated at his first press conference after winning the 12 April election that Hungary will continue buying Russian energy and prioritize the cheapest available oil, a stance that appears to diverge from earlier campaign pledges to phase out Russian energy imports by 2035.
The situation underscores the complex interplay between fiscal policy, energy security, and geopolitical tensions. As the EU weighs its options, the debate highlights the challenge of balancing short-term relief with long-term sustainability. For more on related developments, see our coverage of Europe facing a hostile economic order amid G7 tensions and the UN cutting global growth forecasts due to the Middle East crisis.
