Business & Economy

Germany tackles rising prices with 65 billion euro aid package

Berlin, Sep 4 (EFE).- The German government on Sunday unveiled a new aid package of 65 billion euros ($64.7b) for citizens and businesses to cope with rising energy prices and inflation triggered by Russia’s invasion of Ukraine.

Among the various measures, the German government will introduce an electricity price brake for consumers, which will be financed by the “windfall profits” from energy companies.

The tripartite governing coalition’s plan is to eliminate the exceptional profits for energy suppliers – mainly renewable energy producers and producers of electricity generated from coal and nuclear power – coming from very high market prices amid the war in Ukraine and related sanctions on Russia.

Last week, citing maintenance issues deriving from the international sanctions, Russia completely shut down the Nord Stream 1 gas pipeline, which had only been operating at about 20% capacity.

At a press conference to present the third aid package, the German Chancellor Olaf Scholz said the European Union is working on regulating the energy market. He said his government would implement its plans “quickly”, “either with the European regulations” or “at national level”.

The price brake would provide private consumers a certain amount of electricity at a reduced price, which would be equivalent to a “basic use” and which would be a relief for households and small and medium-sized enterprises and incentives to save energy, he said.

Scholz also announced a successor to the popular subsidized public transport ticket, which between June and August allowed unlimited travel throughout Germany on regional and local transport for 9 euros per month.

The central government, assuming an agreement is reached with the federal states, will make 1.5 billion euros available to finance the new ticket, which would cost between 49 and 69 euros.

Other measures included in the third package include extending the energy subsidy of 300 euros in a lump sum to pensioners and 200 euros to students.

The package also proposes a reform of housing subsidies, increasing the number of beneficiaries from 700,000 to two million by the turn of the year.

“Germany is standing together in difficult times. We will overcome this difficult time as a country. We have taken all decisions to ensure the security of our energy supply despite the challenge of Russia’s actions,” Scholz said.

The finance minister and leader of the Liberals, Christian Lindner, said the package, which more than doubles the amount in the two previous ones combined, would be financed without the need for new debt.

Some 32 billion euros will be mobilized from the federal budgets of 2022 and 2023 thanks to the evolution of revenues and the “provisions” made for the coming year, he said, while the “windfall profits” of the energy companies earmarked for the aid package will total tens of billions, he estimated.

“It is a package that combines solidarity with fairness in benefits and solidity. We maintain our ability to act, we strengthen the people who need our solidarity (…) and we do not forget the middle class that works hard,” he said.

The co-chairman of the Greens, Omid Nouripour, for his part, spoke of a “substantial” and “round” aid package, while affirming that Germany “does not allow itself to be divided” in the face of Russia’s war of aggression in Ukraine, the energy shortage caused by Moscow and the consequent rise in prices. EFE


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