Statec laid out its figures this morning. In three out of four scenarios, a second index-linked increase is still on the cards in 2026. In the only favourable scenario — a short conflict — the half-yearly average for the second half of the year is, in the institution’s own words, ‘very close to the trigger threshold’. Prime Minister 
This is not the only constraint imposed by the first day of negotiations. The same Statec presentation shows that the public deficit could approach 3% of GDP in the event of a prolonged conflict — the threshold for the excessive deficit procedure set out in the European Stability Pact. In this context, any significant tax concession — a cut in corporation tax, a four-tier VAT system, or a €7bn special fund — automatically reduces the margin before the European red line is crossed. The budgetary constraint is no longer a political stance taken by the government: it is a Statec figure presented to all stakeholders this very morning.
This framework changes what is negotiable. On energy in the strict sense, positions are sufficiently aligned to allow for an immediate agreement. The UEL, the OGBL-LCGB, the CGFP and the Chamber of Agriculture are all calling, in slightly different ways, for intervention on electricity network prices, a reduction in VAT on electricity to the minimum permitted at European level, and a reduction in excise duties on fossil fuels — diesel and heating oil — with conditions regarding timing and the energy transition that each party formulates in its own way but which are not incompatible. These measures reduce the CPI by a few tenths of a percentage point, provide relief to both households and businesses, and can be implemented technically without significant legislative delay. This is the core of the agreement that can be signed today.
Added to this is a targeted tax package that satisfies the CGFP without provoking opposition from the UEL: a temporary economic stimulus tax credit, paid directly into the pay packets of employees and pensioners, and limited to the duration of the energy crisis. This measure corresponds exactly to the first demand of the General Confederation of Public Service Employees, which made it a prerequisite for ‘genuine social dialogue’. It does not cost what a complete and permanent adjustment of the tax scale would cost — a demand made by the CGFP and OGBL-LCGB that current budgetary constraints render untenable. For energy-intensive businesses, the activation of the European METSAF and CISAF frameworks, which the UEL details precisely in its note, represents a lever for public aid of up to 70% of eligible additional costs — without direct national budgetary expenditure, as this involves notifying schemes within State aid frameworks already adopted. The Chamber of Agriculture has secured a reduction in the CO2 tax on agricultural and industrial diesel, as requested by the UEL in its Measure 6, and access to fertiliser pre-financing via the EU Fertiliser Action Plan. Limited cost, satisfied stakeholders.
This package — comprising energy measures, a temporary tax credit, METSAF-CISAF grants and agricultural support — is what Frieden can sign off on this evening with all the parties present. It is limited in scope. It does not address any structural issues. But it is well-documented, quantifiable, and each party can claim a component of it without contradicting its own position.
Things that cannot be signed: a longer list
What cannot be agreed upon is more complex. The minimum social wage of +€300 comes up against a gap of €266 between the trade union figure and the indicator recommended by the IGSS itself in its Methodological Paper No. 7 of March 2026 — a calibrated increase to meet the threshold of the European directive, i.e. between €34 and €60 depending on the definition used, remains the only defensible figure based on the data. The €7bn special fund is incompatible with a deficit trajectory approaching 3% of GDP. Institutional co-decision-making requires a legislative revision of the framework for tripartite bodies — it cannot be agreed upon in a single session. The reduction in the IRC to 13% in 2028 called for by the UEL and the freeze on this same reduction called for by the trade unions are symmetrically opposite positions on the same measure: no middle ground exists without rewriting the 2027 draft budget bill.
That leaves the index. This is the only issue where the divide is documented as irreconcilable in the corpus. The UEL proposes a twelve-month deferral of the second instalment, accompanied by an energy tax credit and three additional options — partial compensation for the June instalment, a temporary switch to core inflation, and a flat-rate cap above two SSMs. The OGBL-LCGB and CGFP unions categorically reject each of these options, naming them one by one in their respective statements. Frieden cannot give the UEL what the unions have explicitly listed as a red line, nor can he give the unions a guarantee that the second tranche will not be scrapped — Statec has just ruled out this possibility in three out of four scenarios.
The only realistic way out of this situation is not to make a decision tonight. Taking action on energy prices via the ‘signable package’ automatically reduces inflationary pressure and shifts the question of the second tranche to the Statec mechanism — if it is triggered, it is Brent that decides, not the tripartite committee. No one can hold this against the government. If the measures are sufficient to maintain the short-term scenario — a single tranche in 2026 — the UEL effectively gets what it wanted without the word ‘postponement’ ever having been uttered. If they are not sufficient, the second tranche is an economic reality documented on the morning of 2 June itself, not a political decision. This is the only scenario in which every party can walk away from the table without having lost out.
Structural issues — the redeployment unit, housing, and co-decision — could be referred to a tripartite body for ongoing monitoring, something the trade unions themselves call for in their memorandum. For this referral to be credible and not to repeat the approach of 2022, the mandate must be precise, the timetable must be quantified, and there must be a clause for automatic reconvening. Without these three conditions, the trade unions will refuse to sign — they have explicitly cited the ‘consult then decide’ approach as the reason why social dialogue has deteriorated.
A partial agreement on energy, immediate purchasing power and business support, coupled with a permanent tripartite agenda with a clear mandate on structural issues, is what the 2 June agreement allows for. It is not a grand solution. It is a realistic solution. “It will be costly,” remarks one minister, almost fatalistically.
