Portugal ranks fifth in EU for energy aid budget impact

Portugal is the fifth EU country where energy price support measures have the biggest budget impact relative to GDP, according to the European Commission’s spring forecasts, a sign of the fiscal cost of shielding households and businesses from higher energy prices.

The Commission estimates that fiscal measures adopted by EU member states to soften the impact of rising energy prices amount to €14.5 billion in 2026, or 0.07% of EU GDP. Spain has the largest budgetary weight for such measures this year as a share of GDP, while France has the smallest, with Portugal ranking fifth.

For Portugal, the measures cited include an additional cut in fuel excise tax, support of between €114 and €420 per vehicle for freight transport companies, roadside assistance operators and agricultural cooperatives, and an extraordinary mechanism for professional diesel. In parliament, Prime Minister Luís Montenegro recently put fuel-related support at about €150 million per month.

The Commission said most of the recently adopted support across the EU is not targeted at vulnerable households or energy-intensive companies, despite its guidance. It estimates that 75% of aid is being granted through untargeted measures such as cuts in fuel excise duties and other indirect taxes on energy, while only 25% appears to be targeted.

Brussels also said more than two thirds of the estimated fiscal cost comes from “price measures” such as tax cuts, with the remaining third made up of “income measures”. If the measures included in the forecast were extended until the end of 2026, the total budget cost for the EU would rise to €38.6 billion, or 0.2% of GDP.

Originally published at Eco.pt