The government must immediately prepare a comprehensive plan to address the economic impact of the war

 

11 March 2026, AKEL C.C. Press Office, Nicosia

The continuation and escalation of the war in the Middle East directly affects the economy and the daily lives of citizens. Early indications point to big increases in international energy prices, which will also affect the Cyprus economy, pushing up the cost of living with increases in fuel, electricity, and essential goods.

The government must work in two directions: abroad, it must send a clear message that Cyprus is a safe destination, and at home, it must immediately prepare – based on scenarios – a comprehensive plan to shield the economy and provide support to society against the economic consequences of the war, with the following measures as top priorities:

(a) a permanent reduction in VAT on electricity from 19% to 5% and the abolition of double taxation on fuel, as well as additional measures to reduce energy costs for households and businesses, at a time when the European Commission is already calling for reductions in energy and electricity taxes to address the consequences of the war,

(b) strengthening controls against profiteering on fuel and essential goods,

(c) the definitive withdrawal of “green” taxes, since their imposition at this juncture will place an even greater burden on households and businesses,

(d) provide support for sectors of the economy that will be affected, and in particular for small and medium-sized enterprises, which face greater difficulties in managing such crises,

(e) implement measures to address the reduction in household disposable income due to inflation and the possible increase in the cost of servicing their loans.

AKEL reiterates that, beyond the measures that need to be taken, the best way to address the consequences is to bring the war itself to an immediate end.