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Why the Swiss government doesn’t want a fuel-comparison app

While Austrian consumers are using an app to find cheapest gasoline prices, Switzerland's Federal Council has so far rejected the idea of creating a similar one for Switzerland.

Why the Swiss government doesn’t want a fuel-comparison app
Switzerland doesn't want an app to compare fuel prices. Photo by Dawn McDonald on Unsplash

The digital calculator that shows which service stations in their region have the cheapest petrol at any given moment would be of much use to Swiss motorists these days.

A litre of fuel now exceeds 2 francs across Switzerland, but some stations, especially those far from main cities, have slightly lower prices.

A number of MPs have urged the government to introduce a similar app in Switzerland, pointing to “the lack of transparency in petrol and diesel prices in Switzerland. This allows oil companies to raise prices well above market costs, at the expense of consumers”.

Austria, on the other hand, “has succeeded in solving this problem by relying on market transparency”, deputies said.

However, the Federal Council is not as impressed by the Austrian model, noting that while energy prices have indeed soared in the past months, inflation in Switzerland “remains moderate compared to other countries”.

“In July 2022, it was 3.4 percent —around 5 percent lower than in the eurozone”, authorities said.

They added that the current forecasts for inflation in Switzerland are more favourable elsewhere in Europe as well — 2.5 percent by the end of the year, which should fall to 1.4 percent in 2023.

READ MORE: EXPLAINED: Why Switzerland’s inflation rate has stayed low compared to elsewhere

The Federal Council also argues that the post-Covid economic recovery will continue, although less vigorously than expected before the war in Ukraine.

In addition, Switzerland’s central bank, SNB, which is responsible for maintaining price stability, has enough instruments to thwart any further rise in inflation.

“The Federal Council therefore sees no need to act on gasoline”, the Federal Council said.

The government, however, doesn’t have the last word: MPs have submitted a motion in this regard, which will be decided on during the autumn session of the Parliament, which begins on Monday.

This is not the only case where the government is not intervening to help consumers during these difficult times.

Though left-leaning parties are urging the Federal Council to offer financial help to the hardest-hit households, it has no plans to do so.

As Finance Minister Ueli Maurer said in an interview, even if energy prices were to remain at a high level in the coming years, the Federal Council does not plan to intervene.

“The state cannot suddenly subsidise a market and no longer be able to get out of it afterwards”, he said.

READ MORE: What are Switzerland’s four main challenges right now?

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How European countries are spending billions on easing energy crisis

European governments are announcing emergency measures on a near-weekly basis to protect households and businesses from the energy crisis stemming from Russia's war in Ukraine.

How European countries are spending billions on easing energy crisis

Hundreds of billions of euros and counting have been shelled out since Russia invaded its pro-EU neighbour in late February.

Governments have gone all out: from capping gas and electricity prices to rescuing struggling energy companies and providing direct aid to households to fill up their cars.

The public spending has continued, even though European Union countries had accumulated mountains of new debt to save their economies during the Covid pandemic in 2020.

But some leaders have taken pride at their use of the public purse to battle this new crisis, which has sent inflation soaring, raised the cost of living and sparked fears of recession.

After announcing €14billion in new measures last week, Italian Prime Minister Mario Draghi boasted the latest spending put Italy, “among the countries that have spent the most in Europe”.

The Bruegel institute, a Brussels-based think tank that is tracking energy crisis spending by EU governments, ranks Italy as the second-biggest spender in Europe, after Germany.

READ ALSO How EU countries aim to cut energy bills and avoid blackouts this winter

Rome has allocated €59.2billion since September 2021 to shield households and businesses from the rising energy prices, accounting for 3.3 percent of its gross domestic product.

Germany tops the list with €100.2billion, or 2.8 percent of its GDP, as the country was hit hard by its reliance on Russian gas supplies, which have dwindled in suspected retaliation over Western sanctions against Moscow for the war.

On Wednesday, Germany announced the nationalisation of troubled gas giant Uniper.

France, which shielded consumers from gas and electricity price rises early, ranks third with €53.6billion euros allocated so far, representing 2.2 percent of its GDP.

Spending to continue rising
EU countries have now put up €314billion so far since September 2021, according to Bruegel.

“This number is set to increase as energy prices remain elevated,” Simone Tagliapietra, a senior fellow at Bruegel, told AFP.

The energy bills of a typical European family could reach €500 per month early next year, compared to €160 in 2021, according to US investment bank Goldman Sachs.

The measures to help consumers have ranged from a special tax on excess profits in Italy, to the energy price freeze in France, and subsidies public transport in Germany.

But the spending follows a pandemic response that increased public debt, which in the first quarter accounted for 189 percent of Greece’s GDP, 153 percent in Italy, 127 percent in Portugal, 118 percent in Spain and 114 percent in France.

“Initially designed as a temporary response to what was supposed to be a temporary problem, these measures have ballooned and become structural,” Tagliapietra said.

“This is clearly not sustainable from a public finance perspective. It is important that governments make an effort to focus this action on the most vulnerable households and businesses as much as possible.”

Budget reform
The higher spending comes as borrowing costs are rising. The European Central Bank hiked its rate for the first time in more than a decade in July to combat runaway inflation, which has been fuelled by soaring energy prices.

The yield on 10-year French sovereign bonds reached an eight-year high of 2.5 percent on Tuesday, while Germany now pays 1.8 percent interest after boasting a negative rate at the start of the year.

The rate charged to Italy has quadrupled from one percent earlier this year to four percent now, reviving the spectre of the debt crisis that threatened the eurozone a decade ago.

“It is critical to avoid debt crises that could have large destabilising effects and put the EU itself at risk,” the International Monetary Fund warned in a recent blog calling for reforms to budget rules.

The EU has suspended until 2023 rules that limit the public deficit of countries to three percent of GDP and debt to 60 percent.

The European Commission plans to present next month proposals to reform the 27-nation bloc’s budget rules, which have been shattered by the crises.