News: The EU plans to ease fiscal restrictions to allow member states to introduce energy subsidy measures.

Sources familiar with the matter revealed that the European Commission is preparing to ease fiscal restrictions, allowing member states to launch temporary energy-related spending to alleviate the pressure of soaring energy prices caused by the Middle East conflict.

The Financial Times reported on Tuesday (June 2) citing EU officials that Brussels is exploring plans that would allow member states to allocate up to 0.3% of their GDP to energy-related measures, without being subject to the EU's 3% fiscal deficit limit.

The proposed plan, once implemented, would allow member state governments to provide emergency energy subsidies to households and businesses without being bound by EU deficit cap regulations and without the risk of being fined by the EU.

If the exemption is implemented, it will be the second time in less than two years that the EU has adjusted its fiscal framework. Last year, Brussels activated an "exit clause" that allows member states to allocate the equivalent of 1.5% of their GDP to defense spending annually for up to four years without fear of violating EU fiscal regulations, as part of a broader European effort to rebuild its military.

EU officials revealed that the newly planned 0.3% energy buffer will be part of the 1.5% defense spending exemption ratio.

Source: [Lianhe Zaobao] (https://www.zaobao.com/news/world/story20260602-9143341)