Debt Burdens Limit European Energy Support Measures

The surge in energy prices, triggered by the conflict involving the United States and Israel against Iran, is placing European governments under immense pressure to support households and businesses. However, strained finances across major economies suggest that the massive financial firepower deployed following the invasion of Ukraine by Russia three years ago is unlikely to be repeated. While governments are beginning to respond with measures like oil reserve releases and price caps, their fiscal room for maneuver is significantly more restricted than in previous crises.