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ECB's Rehn warns against excessive energy expenditure

Governor of the Bank of Finland, Olli Rehn attends a Reuters Newsmaker event in London

HELSINKI (Reuters) - Euro area countries should avoid increasing spending too much due to the energy crisis as long-term debt already poses a threat in one-third of the bloc, European Central Bank policymaker and Finnish central bank chief Olli Rehn said on Thursday.

"The efforts of EU countries to identify ways to limit household energy bills are understandable but indiscriminately increasing expenditure would not be - and would not help in the fight against inflation," Rehn said in a statement.

Instead, he called for tailored and temporary measures targeted at the most vulnerable to help them pay for their energy.

"The long-term debt sustainability of more than one-third of the countries in the euro area is under serious threat," he said.

Rehn said Europe should combine its forces in combating energy-related inflation via energy market reforms but first and foremost by saving energy.

"There are some encouraging signs that the market economy is to some extent working in the sense that we see higher energy prices affecting demand," Rehn said, citing statistics from Finland showing that the use of natural gas has halved this year thanks to energy saving by industrial users.

(Reporting by Anne Kauranen; Editing by Balazs Koranyi and Hugh Lawson)