Greece urges EU to loosen fiscal rules as energy crisis deepens

Greek Prime Minister Kyriakos Mitsotakis is urging the European Commission to loosen fiscal rules, citing the deepening energy crisis that has seen EU gasoline prices rise by 53% and diesel prices increase by 66%. According to the Greek leader's letter dated 30 September, the crisis is more prolonged than anticipated due to ongoing attacks on energy facilities in the Middle East.

Mitsotakis emphasized that Greece, which has the largest national debt among EU member states, needs greater fiscal flexibility to shield households and businesses from the energy shock while maintaining fiscal sustainability.

The Greek government has been providing substantial cash aid for energy bills, fuel, and farming, in addition to slashing income and property taxes to support voters and bolster businesses ahead of upcoming parliamentary elections in 2027. However, Mitsotakis warned that artificially lowering energy prices has led to a point where governments lack funds to continue these measures, as demonstrated by Belgian Prime Minister Bart De Wever's ruling out of broad actions to tackle rising energy costs.

Greece proposes that temporary national support measures for consumers and businesses could be exempt from the EU's net-expenditure indicator up to a certain limit. This exemption would also allow governments to account for additional VAT revenues stemming from unexpected energy price inflation. Mitsotakis emphasized that the current proposed solution by the European Commission, which focuses on reducing energy demand, is insufficient and called for a broader range of ideas to address the urgency of the current situation.

He expects the proposal to be discussed at an upcoming energy ministers' meeting in Brussels and at next year's summit of EU heads of state and government.