Germany agrees €200bn package to prevent energy price spikes


BERLIN—German Chancellor Olaf Scholz has announced a €200 billion ($194 billion) “defense shield,” including curbing gas prices and lowering fuel consumption taxes, to protect businesses and households from the impact of soaring energy prices. ” was launched.

Russia, Europe’s largest economy, is trying to cope with skyrocketing gas and electricity costs, largely caused by the collapse of Russia’s gas supply to Europe. Moscow blames Western sanctions after February’s invasion of Ukraine.

“The government will do everything it can because it has to bring the price down.

Under the plan, which will run until spring 2024, the government will introduce an emergency price brake on gas, the details of which will be announced next month. We are doing away with a planned gas tax intended to help businesses struggling with high spot market prices.

Temporary electricity price brakes subsidize basic consumption by consumers and small businesses. Gas consumption tax will be reduced from 19% to 7%.

In an effort to reduce Russia’s dependence on energy, Germany is also promoting renewable energy expansion and developing liquefied gas terminals.

Two nuclear power plants, which were due to shut down by the end of this year to help homes and businesses survive the winter supply disruptions, especially in southern Germany, can remain operational until spring 2023. .

Industry groups welcomed the package.

“This is an important relief,” said Wolfgang Grosse Entrup, director of the VCI Chemicals Association. “More and more businesses are turning their backs on the wall, and we need more details now.”

“Crisis Spending”

The package will be financed with new debt this year. This is because Berlin is taking advantage of the suspension of the constitutional limit on new debt of her 0.35% of gross domestic product.

Finance Minister Christian Lindner said he hopes to comply with the restrictions next year.

Lindner of the pro-business Liberal Democrats (FDP), which shares power with Scholz’ social democrats and the Greens, said on Thursday that the country’s finances were stable.

“We can’t put it another way. We are in an energy war,” Lindner said. “We want to clearly separate crisis spending from normal budget management and we want to send a very clear signal to the capital markets.”

He also said the measure would act as a brake on inflation, which reached its highest level in more than a quarter of a century in September.

Opposition Chancellor Markus Soder of southern Bavaria said the move sent the right signal.

“It gives the industry and the public confidence that we can get through the winter,” he said.

($1 = 1.0326 Euro)

Holger Hansen, Kirsty Knoll