The sharp rise in energy prices has not yet prompted a significant political response in Luxembourg. Questioned in the Chamber by LSAP MPs Mars Di Bartolomeo and Georges Engel, the government, through the Prime Minister Luc Frieden (CSV), plays for time in a parliamentary response coordinated with the Minister for the Economy, Lex Delles (DP), published on Friday 10 April.

Despite a rise of around 40% in oil prices and 65% in liquefied natural gas prices on international markets since early March, the government is currently refusing to invoke the tripartite mechanism, preferring to monitor the development of a crisis it considers still too unstable. The government points to a context largely dictated by geopolitics, where prices remain “highly volatile and partly speculative”. The recent announcement of a ceasefire was, moreover, enough to cause prices to fall, illustrating a situation that is difficult to interpret and therefore tricky to address through structural measures.

On the ground, the impact is cushioned by a number of buffers. The price cap mechanism limits the direct pass-through of price rises at the pump, whilst long-term supply contracts with electricity and gas suppliers delay the impact on households. The government also stresses that there is no immediate risk to supply in Europe.

An impact on public finances

To keep energy bills down, the government is opening its chequebook and repeating the same message it has been putting out for several weeks. “A budget of €150 million per year between 2026 and 2028 has been set aside to ease the burden of electricity costs, alongside increased support such as the cost-of-living allowance and the energy bonus.” The government is promoting “a long-term strategy based on renewable energy, hydrogen and batteries.”

At the same time, rising prices are beginning to have a subtle but tangible impact on public finances. Between 1 March and 9 April, the government collected around an additional €5.65m in VAT on petroleum products. This is a modest windfall, particularly as excise duties remain unchanged, as they are set per litre. However, there is no question of earmarking these revenues for specific measures. The government reiterates the principle of non-earmarking, which prevents revenue from being directly linked to expenditure.

Ultimately, the government is playing for time. There will be no tripartite talks at this stage, unless price indexation spirals out of control, but it is maintaining a watchful stance and has measures ready to be implemented. This is a clear stance in the face of a crisis whose underlying causes remain largely beyond national control.