This is the first EU summit for German Chancellor Olaf Scholz since his government announced a massive €200-billion financial scheme to help German citizens and businesses cushion the pain from soaring gas bills.

The plan, described by Scholz as a "defensive shield," is meant to introduce emergency price brakes for gas and electricity consumption. It will run for three years.

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Although other countries have expressed sympathy towards Germany, a country that was highly dependent on Russian gas and is now scrambling to find alternative suppliers, the €200-billion plan ruffled feathers and raised concerns over possible distortions across the single market. Inevitably, it exposed the gap between wealthy and debt-ridden countries.

European Commission Ursula von der Leyen has not openly criticised Berlin but has insisted that without a common European solution, the bloc risks fragmentation. “It’s important that all member states are able and have the fiscal space to invest in this [green] transition,” von der Leyen said on Thursday.

As a result, some voices have begun calling for a new issuance of EU debt, following the example of the €750-billion recovery fund agreed in 2020 to fight the pandemic. Another possible model is SURE, the €100-billion programme of cheap loans that helped preserve jobs during the lockdowns.

But some member states, like Germany and the Netherlands, are resisting the issuance of more EU debt and think the bloc should instead focus on the cash that is still available.

“A good part of the funds in the recovery fund have not yet been used and they are also designated for what is necessary now, investing in infrastructure, fighting climate change, investing in renewable energies and so on,” Scholz said on Thursday.

EU heads of state and government are meeting in Brussels on Thursday to try to reach a consensus on how to curb high energy prices and make sure Europeans can weather the economic storm ahead.

Leaders will consider the latest package of measures proposed by the European Commission which includes joint gas purchases and a dynamic cap for transactions at Europe's benchmark, the Dutch Title Transfer Facility (TTF).

The other main topic for leaders to discuss will be how to protect the bloc's economy, hit hard by high energy prices.

Countries are also expected to discuss Russia's war in Ukraine following a virtual address by Volodymyr Zelenskyy and EU-China relations as President Xi Jinping's leadership was renewed for a third unprecedented third term.

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