Brussels calls on Portugal to cut energy support measures

The European Commission on Tuesday called on Portugal to cut energy support measures as quickly as possible and found the country had made limited progress in addressing structural issues in its budget recommendations.

In its opinion on the government budget proposal for 2024 (OE2024), published on Tuesday as part of the European Semester, the community executive considers that it is “not fully consistent with the recommendation” of the Council.

“The Commission proposes that Portugal reduce its energy support measures as quickly as possible in 2023 and 2024,” he notes.

In July, the Council recommended that Portugal reduce its current energy support, specifying that if energy prices rise further, requiring new or permanent support measures, the government should ensure that they are aimed at protecting vulnerable families and businesses, affordability and maintaining incentives to energy saving.

“Most of these energy support measures [previstas no Orçamento do Estado] in 2023 and 2024 do not appear to target the most vulnerable households or businesses and do not fully maintain the price signal to reduce energy demand and improve energy efficiency,” he says.

Based on autumn economic forecasts published last week, Brussels also notes that it believes Portugal is expected to post a surplus of 0.1% of gross domestic product (GDP) in 2024, within the Treaty target of 3 % of GDP. GDP, and that the public debt ratio will be 100.3% in 2024, above the Treaty benchmark of 60% of GDP.

The Commission also considers that Portugal has made “limited progress on the structural elements of the budget recommendations” made by the Council on 14 July 2023 and calls on “the Portuguese authorities to accelerate progress.”

Brussels expects Portugal to “maintain nationally financed public investments” and continue to “ensure the effective absorption of subsidies from the Recovery and Resilience Mechanism and other European Union funds.”

The European Semester provides a framework for coordinating the economic policies of the countries of the European Union, within which the European Commission evaluates national budget plans and monitors progress in public finances.

The President of the Republic announced the dissolution of the Assembly of the Republic and called early elections for March 10, 2024, following the resignation of Prime Minister António Costa.

However, Marcelo Rebelo de Sousa will delay the publication of the dissolution decree until January, which will allow for the final global vote on OE2024, scheduled for November 29, and the entry into force of the document.

Discussion of the document in plenary session will begin on November 23 and will continue throughout the week, with debate in the morning and voting in the afternoon as usual.