Published by Global Banking & Finance Review®
Posted on March 6, 2026
3 min readLast updated: April 1, 2026
Add as preferred source on GoogleFitch warns that if European governments deploy new energy support measures amid surging oil and gas prices, this could further strain already weak fiscal positions in countries like France and Britain, complicating efforts to rein in high debt and deficits.
By Yoruk Bahceli
LONDON, March 6 (Reuters) - Fitch Ratings is watching whether European governments will need to roll out support measures to tackle higher energy prices, a move that could add to fiscal pressures in the likes of France and Britain, a senior analyst told Reuters on Friday.
Oil and gas prices have surged this week as war in the Middle East stoked fears among policymakers and financial markets that inflation, which surged following Russia's invasion of Ukraine, may rise again.
Whether they provide support will depend on how long the war lasts and whether energy prices rise further. So far, Spain is studying potential support measures for consumers and businesses, while Italy is ready to hike taxes on companies that benefit unduly from higher gas prices.
"Governments are much more sensitive now to the issue of energy prices and could possibly react much sooner", Federico Barriga-Salazar, head of Western Europe sovereigns at Fitch Ratings, told Reuters, citing a willingness to talk about support at an early stage.
"The point is that any measure that is taken on the fiscal side will have a cost. If it's very temporary, the costs do not really add up, especially in the large economies."
Temporary relief on energy taxes or oil prices, which have risen less than gas, would have more limited impact but additional programmes to support the industrial sector and general, rather than targeted measures, would cost more, he said.
Even the more limited measures could be challenging for those countries already starting with a weaker fiscal position, he said, referring to France, Belgium and Britain given their high deficits and challenging debt trajectories.
For them, fiscal consolidation plans have to be "more consistent over time to really tackle that and anything that adds to spending pressures complicates this."
France's debt is nearly 120% of output, Britain's is close to 100%.
Britain's finance minister said this week it was hard to predict when a windfall tax on energy companies' profits would come to an end, but was still committed to removing it. Germany has said it will refrain from lowering taxes on petrol.
If governments do provide support, Fitch will watch whether they take any offsetting measures to cover some of the costs, Barriga-Salazar added.
For now, the biggest risk is the impact of rising energy prices on inflation and growth, he said.
(Reporting by Yoruk Bahceli; Editing by Dhara Ranasinghe)
Fitch Ratings is concerned that government measures to support against high energy prices could add fiscal pressure and increase deficits, especially in countries like France and Britain.
France, Britain, and Belgium face high fiscal risks due to their existing deficits and debt levels when considering new energy support measures.
Whether governments provide energy support depends on how long elevated energy prices last and how severely prices increase.
The biggest risk is the impact of rising energy prices on inflation and economic growth.
Spain is studying possible support for consumers and businesses, Italy may tax windfall profits, and Germany has opted not to lower petrol taxes.
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