As markets slowly price in a longer-lasting disruption from the Middle East conflict, European governments are dusting off playbooks used in 2020 and 2022 to support households and firms through the current shock. However, the key difference today is many countries lack the fiscal capacity to match the largesse of previous crises, with the notable exception of Ireland. With many European governments running substantial fiscal deficits, the question remains whether bond markets might baulk at a fresh wave of supply in the coming months. In 2022-23, analysis by the IMF showed European governments spent, on average, nearly 3% of GDP on energy support packages. Although fiscal capacity is lacking in many countries, Ireland is actually in a stronger position than four years ago.

Source: Irish Examiner April 06, 2026 11:30 UTC