When energy prices started to climb after the crisis linked to Covid-19 and then with the war in Ukraine, the government did not hesitate to reactivate a “whatever the cost” budget to come to household assistance. In total, nearly 100 billion euros of public money were mobilized between 2021 and 2023 through various mechanisms such as the tariff shield which contained the rise in gas and electricity prices, the boost to pump for motorists, or inflation compensation.
An unprecedented effort, comparable in scale to that deployed during the health crisis, even if part of the funds – around a third – is recovered by the public authorities from energy companies through various levies. Because the meter is still running: if the tariff shield on gas prices, which is falling, was removed on 1er July, the one targeting electricity, whose prices remain high, was extended until 2025. The system will therefore continue to be expensive for the taxpayer.
Was it necessary to deploy so much public money, especially to support the consumption of fossil fuels? Economists from the Economic Analysis Council (CAE), an organization dependent on Matignon, believe that the measures have “considerably” limited the rise in prices for households, by transferring it to the State budget, which made it possible to “support activity, consumption and investment in 2023”, they write in a note published on Tuesday, July 11. The gross disposable income of assisted households has thus increased by 1,021 euros per consumption unit between 2019 and 2023, they observe, stressing in passing that companies, which have passed on 100% of price increases to consumers, are much less inclined to reduce them when energy becomes cheap again since their reductions are only transmitted up to 40%.
Improve statistical tools
The main criticism of the authors joins that already formulated by others since the return of inflation: aid has been distributed too widely, and its weight for public finances is unsustainable in the long term. They therefore recommend in the immediate future a faster exit from the aid in force, “by gradually excluding the 20% of the wealthiest households from the electricity tariff shield, which will save 5 billion euros”summarizes the economist Xavier Jaravel, co-author of the study.
Medium term, “for the next crisis”they plead for the improvement of statistical tools in order to “knowing accurately and in real time the levels of household energy consumption”, advances its co-author Xavier Ragot. Such data should make it possible to reserve aid for those who need it most, with criteria other than income alone. “At an equivalent income level, there is a great heterogeneity of situations”, continues the economist. Low-income households will indeed suffer the shock of inflation very differently, depending on whether their housing is energy-intensive or not. Likewise, “Those aged 60-74 have an inflation rate 1.5 points higher than that of households under 30 due to much higher spending on food and housing”notes the study.
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