Italy Scales Down Energy Relief With New €4.9 Billion Package

Alessandra Migliaccio and Chiara Albanese, Bloomberg News

Street lights lit up outside a residential tower block at night in Brescia, Italy, on Sunday, July 3, 2022. Italy's government plans further measures to cushion the impact of high energy prices, including extending a fuel tax holiday to the beginning of October, Il Messaggero newspaper reported. Photographer: Francesca Volpi/Bloomberg , Bloomberg

(Bloomberg) -- Italy’s cabinet approved a new energy relief package worth €4.9 billion ($5.3 billion) that extends support to low income families but ends fiscal relief for most other households.

The new measures, approved at a cabinet meeting on Tuesday, reduce energy bills until the end of June for families earning less than €15,000 annually, and offer targeted aid to companies facing high costs.

Funds will come from a €21 billion budget reserve, as well as from higher-than-expected economic growth, and therefore won’t require any extra deficit.

Read More: Italy Prepares €4.9 Billion Aid as Part of Support Phase-Out

The move marks a new phase in Italy’s push to protect citizens and businesses from rising energy prices, an effort that has so far cost more than €90 billion. With inflation still high but slowing, Prime Minister Giorgia Meloni and Finance Minister Giancarlo Giorgetti are signaling it’s time to move to more targeted intervention.

The decision will lead to higher costs for most Italians, particularly for electricity, while gas prices will continue to benefit from lower value added tax.