Energy Poverty Europe: Portugal one of the countries most at risk

What is energy poverty? Energy poverty is a situation in which households are unable to access essential energy services and products. Portugal is the fifth country in the European Union (EU) at greatest risk of energy poverty, accentuated by the crisis, announced by the European Commission (EC), pointing out that government measures to support families weigh 2.1% on GDP this year. This is the situation regarding energy poverty in Europe, where Portugal is one of the countries most at risk. 

High inflation and the energy crisis in Portugal

In its autumn macroeconomic forecast, the EC executive reflects on the weight that high inflation levels and the accentuated energy crisis have on the risk of energy poverty, placing Portugal as the fifth worst country in the EU - only surpassed by Lithuania, Croatia, Latvia and Romania -, given the pre-existing energy poverty rate and the expected rise with the current conjuncture.

"It is possible to quantify the effect of rising energy and consumer prices on energy poverty, which is defined as a situation in which households lack access to essential energy services", with an "increase in energy poverty as a result of the increase in the cost of living", the European Commission states in the document. For this reason, it is even possible to "infer an increase in financial difficulty due to the increase in energy prices"

What impact the measures implemented by the Government have

In the chapter on Portugal, the EU executive noted that "budgetary policy measures to mitigate the impact of high energy prices, namely in the form of income support and reduction of indirect taxes for both families and businesses, are expected to have a budgetary cost of 2.1% of GDP in 2022.

Asked by Lusa about these figures at the press conference to present the autumn macroeconomic forecasts in Brussels, the European Commissioner for the Economy, Paolo Gentiloni, highlighted the "package of measures adopted [by the Portuguese government] to mitigate this impact throughout this year". "Through a reduction in fuel tax, a freeze on the carbon tax on fuel tax, a one-off support payable in October to two different groups of the population, subsidies for companies facing rising gas-related costs, etc," he listed.

According to Paolo Gentiloni, this package leads to the "estimated 2.1% GDP" when it comes to the budgetary measures adopted this year by the Portuguese Executive to support families and businesses to face the energy crisis.

"So this is a substantial impact and I think it is important to address the risks of energy poverty, which of course exist for several member states. Of course, what we always ask is that these measures be as temporary as possible, but we know that it is not easy," said the European Commissioner, questioned by Lusa.

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Price pressures and record inflation in the EU

In the autumn macroeconomic forecast, Brussels warns that "price pressures have continued to intensify as inflation hits new record highs" this year, but still the weight of the energy component "has stabilised since June, albeit at a high level, as accelerating gas and electricity prices offset the slowdown in fuel inflation".

"This relative stability, however, masked important compositional shifts within energy inflation, as the gradual decline in transport fuel inflation, induced by falling Brent oil prices, was offset by a strong increase in the contribution of gas inflation and, to a lesser extent, electricity and other heating fuels," the EU executive concludes.

The annual inflation rate in the eurozone again set a record in October, reaching 10.7% after 9.9% the previous month, according to an estimate released a fortnight ago by the European Union's statistical office, Eurostat.