Progressive Economics Network 2024 (1)

Over the last two years, rising gas and fuel prices and ensuing economic and social disruptions have led to a strong increase in ‘market management’ policies across Europe. These were policies to ease the pain of the cost of living crisis on households and businesses, including through directly influencing market prices and profits.

Spain, Portugal and France were some of the first to cap their energy prices, and later, they were followed by Germany, the UK and other countries. Businesses were supported through subsidies whilst taxes on extra profits were introduced by led to insignificant revenues. Market designs were overhauled and the EU is inching closer to EU-wide electricity market reform to stop prices fluctuating too much.

Going forward, such policies are likely to continue being debated: key issues include whether energy prices should be kept lower and linked to decarbonisation to support jobs and industry or whether EU governments need wholly different institutions to fight price pressures along value chains as they build up rather than after the fact.  

This PEN meeting gathered academics, policymakers, and key advisors to discuss the experience of these new approaches to managing inflation and how they should be refined to build up a progressive toolbox approach to dealing with inflation. The discussion included presentations of scientific policy-relevant papers and contributions with examples of policies from different European Member States.

The agenda also included a keynote speech and presentation by Professor Isabella Weber, Associate Professor of Economics, University of Massachusetts Amherst & Associate in Research, Fairbank Center, Harvard University.

The key questions for the discussions included:

1. How can we categorise different types of market interventions to deal with inflation implemented over the last two years? What were their costs, benefits, and impacts?  

2. What are the main features of the policies implemented in European member states: their design, results, reasons for success and lessons for the future?

3. How can we prepare for future inflation shocks? Crisis preparedness, a ready-to-use toolbox, windfall taxes or anti-trust efforts and other reforms to competition policy.  

4. What reforms need to be carried out to make the EU economy more resilient to inflation shocks (energy and food markets reform, regulation of commodity trade etc.)?  

5. What is the link between inflation-resilience and green transition? How can the policy toolbox can be used to advance both goals?  

6. What is the role of the EU in this? What instruments and institutions can be used & which need to be developed? 

For more information regarding the Progressive Economics Network and its activities, please do not hesitate to contact Anna Kolesnichenko, FEPS Policy Analyst on Economy (anna.kolesnichenko@feps-europe.eu) or Vanessa Zwisele, FEPS Project Officer (vanessa.zwisele@feps-europe.eu).