The four largest EU countries have announced more than 80 billion euros in measures to protect consumers and businesses from a surge in energy prices exacerbated by Russia’s invasion of Ukraine – but economists have warned that many of these measures could backfire.

Germany, France, Italy and Spain have announced plans to cut taxes or fund tax rebates for fuel, electricity or natural gas in response to soaring energy prices in an attempt to protect their economies from soaring costs for companies and falling consumers’ disposable income.

However, by softening the shock of rising energy prices, the government could exacerbate the problem by reducing the incentive for households and businesses to reduce electricity and fuel consumption, while making it harder for them to wean themselves off Russia’s fossil fuels.

“It’s bad economics,” said Rüdiger Bachmann, a professor of economics at the University of Notre Dame. “You want the price mechanism to work, by sending a signal that the commodity is scarce, allowing people to decide whether or not they want to change their behavior.”

Many European countries are transferring money to vulnerable groups to help them cope with higher consumer energy prices, which have risen 45% in the euro zone over the past year, largely due to tighter supplies.Bruegel think tank established Of the 25 countries it assessed, only three did not make such payments.

But Bruegel found that 17 countries are also cutting energy taxes or tariffs, while 10 countries are regulating retail energy prices and 3 countries are regulating wholesale prices.

The French government has further limited increases in household electricity bills. French state-owned energy group EDF, estimated Combined with a requirement to sell its nuclear power below wholesale prices, the cap would reduce earnings by 10 billion euros.

“The subsidy for home energy is crazy – it reduces the incentive to reduce energy consumption,” said Klaus Adam, professor of economics at the University of Mannheim. “Give everyone an amount each month and let them decide if they want to use it. to pay higher gasoline prices, or to save energy and spend it elsewhere.”

Veronika Grimm, a member of the committee of economic experts advising the German government, criticized the latest package of measures berlin announced Helped businesses with high energy prices last week.

The package will include “time-limited and narrowly-scoped cost subsidies” for companies whose electricity bills have at least doubled since last year. “It is very unfortunate to subsidize the use of fossil fuels by directly subsidizing energy consumption,” Green told Die Welt newspaper. “Ultimately, this keeps gas prices high on exchanges.”

as part of Spain’s €16 billionshock planTo address the fallout from the conflict in Ukraine, it plans to lower the cost of fuel prices in an attempt to defuse an unofficial transport strike that began last month. Spain is also working with Portugal on a new plan to cap gas prices.

France announced a scheme last month to give fuel rebates of 0.15 euros per litre for four months from this month, while Germany’s 16 billion euro plan Measures to help households include lowering petrol prices by €0.30 a litre and diesel by €0.14 a litre for three months. italian says It will spend about 6 billion euros in February to help cut energy bills, after already spending about 10 billion euros trying to lower electricity costs for consumers.

By keeping demand high, the measures could undermine EU-led efforts to transition away from Russian energy imports, economists said.Brussels recently agreed to ban Russian coal imports from August debate Imposing a similar embargo on oil imports while working on a plan to cut the country’s natural gas imports by two-thirds next year.

Germany resisted calls for an immediate EU embargo on all Russian energy imports. Five German economic agencies recently warned that the move would lead to a deep recession in the country that would drop output by 2.2% next year and wipe out more than 400,000 jobs.

Lower household energy use could be a key part of this shift from Russian imports. “Household gas consumption has enormous potential for savings, for example in terms of heating, with very low economic costs,” said Katharina Utermöhl, senior economist at Allianz.

If all German households reduce room temperature by 3 degrees in cooler months, Utermöhl estimated This will save gas consumption equivalent to that used in the base metals and food sectors, which employ about 1 million people in the country.