Targeted, Implementable, and Practical Energy Relief Measures for Households in Europe

Abstract

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European Housing Markets at a Turning Point – Risks, Household and Bank Vulnerabilities, and Policy Options

“…This is consistent withArregui et al (2022) who report an average fiscal cost of household support measures in 2022 and 2023 of 2.7 percent of annual GDP. Our numbers are quoted as a share of 2-year cumulative GDP over 2022 and 2023.28 For example, estimates of the costs of UK's 'Energy Price Guarantee' (EPG) introduced in September 2022 to cap the unit cost of energy for households range from GBP 52 billion tp GBP 140 billion over two years (see estimates by the UK government, the Institute for Fiscal Studies and Cornwall consulting firm).©International Monetary Fund.…”

“…In some cases, support has been more targeted -such as cost-of-living payments going to low-income households or covering electricity consumption below a threshold. In Europe, only 30 percent of the schemes designed to households can be considered as having been targeted (Figure 25), as documented also by Arregui et al (2022).…”

“…The implications of real estate booms and busts for monetary and macroprudential policy in Europe have been examined byMuellbauer (2022), for example. OECD (2021) provides insights for the design of housing policies to support sustainable housing and housing affordability.4 The ECB (2022) considers that households default when they exhaust their liquid buffers.5 WhileArregui et al (2022) find that most fiscal policies aimed at cushioning the impact of the energy crisis on households and firms are untargeted, they do not measure the benefits of government support in terms of avoided household balance sheet stress and financial sector stability.©International Monetary Fund. Not for Redistribution…”

“…While the speed of adjustment to market rates varies across countries depending on the re-setting practices of retail prices as documented inArregui et al (2022), after two years the pass-through is generally complete.20 This implies that the average cumulative household income over 2022-23 would grow by 2.3 percent in the euro area, and 7.8 percent in Emerging Europe, respectively. 21 This definition of vulnerability refers to debt servicing costs rather than to the wider definition of housing costs used in Section III.…”

The end of the experiment? The energy crisis, neoliberal energy, and the limits to a socio-ecological fix

“…It has arguably gone further in liberalising these areas than any other nation (Rutledge, 2007), even promoting its system abroad (British Embassy Tokyo, 2016). The UK is now also experiencing much higher price shocks than nations with comparable sized economies, and spending more on interventions to protect energy consumers and capital flows (Carrington, 2022). It therefore makes an ideal case study of paradigmatic neoliberal energy policy.…”