Europe's energy crisis is close to costing the EU and UK governments $500 billion

• Europe's energy crisis is close to costing 500 billion euros, as nations scramble to shield citizens from a harsh winter.
• EU governments are shelling out 314 billion euros, while the UK has earmarked 178 billion euros, according to the think tank Bruegel.

The energy crisis is close to costing Europe 500 billion euros, or $496 billion, according to the think tank Bruegel, a sign of the strain governments are facing to protect citizens from a harsh winter.

Bruegel estimated the UK has earmarked the equivalent of 178 billion euros towards the energy crisis so far, and European Union nations have set aside around 314 billion euros, according to data published on Wednesday.

Within the 27-country bloc, Germany leads the pack with 100.2 billion euros allocated toward the energy crisis, followed by France and Italy, with 53.6 billion euros and 59.2 billion euros, respectively.

Those costs are largely in government efforts to shield households and businesses from sky-high energy prices, which have soared since Europe was choked off from Russian gas supplies.

Dutch TTF gas futures, the European benchmark, surged by more than 400% at their peak during 2022. Prices have since pared gains and are now up 220%, with the front-month contract around €204 euros MWh on Wednesday.

So far, the UK has implemented a price cap on heating, and other nations like Germany are initiating large-scale bailouts and earmarking billions in aid to energy firms in the hopes of being able to secure enough supply for households this winter.

Some have criticized those measures for putting a strain on fiscal spending, but that could be necessary to keep eurozone inflation under control, experts warn, pointing to the 9.1% inflation rate reported in August.

Top economist Paul Krugman has said that letting households bear the burden of high prices wasn't "really an option," and could set the continent off into a wage-price inflation spiral, which would be even more expensive for Europe to rectify.

But the economic outlook remains grim, even with billions in government aid. BlackRock analysts previously warned that Europe was set to tip itself into a severe recession by early 2023, seeing a downside scenario of the economy contracting by 0.9% through the end of the year.