by Germany plans to set up a €200 billion funding scheme to control rising energy costs. Electricity and gas prices have skyrocketed uncontrollably over the last few months. Economists dubbed the situation an energy war.
Germany Releases Funds To Quell Energy Crisis
The government of Germany recently assented to a relief fund to encourage borrowing as energy costs jump. It organized the grant under a section referred to as the Economic Stabilization Fund. Meanwhile, this was the same anchor established during the pandemic to distribute money to citizens.
Gas importers and suppliers cannot sell their products at a profitable rate to customers. They sell products bought on the international market at a lower price to domestic buyers. So, the government seeks to reimburse them with money from this program.
Linder met with Robert Habeck, Germany’s economic minister, and Chancellor Olaf Scholz at a conference. In the meeting, he stated that Germany demonstrated its financial prowess amid an energy crisis. He added that its core creed is to see hiking energy prices deplete.
As part of his opening remark, he said they are building walls to suppress further price expansion.
To this end, the government has decided to abort its initial fiscal impositions on citizens. Some months ago, Germany taxed its citizens on customers’ bills. Meanwhile, Inflation had just peaked at a 40-year all-time high then.
Germany was in a tight spot economically as the cost of goods surged. So, the duty sparked anger among the public.
According to the Federal Statistics Office, the Consumers Price Index rose 10 percent in September. It overhauled its range a year ago. And an instigating factor behind such height is attributed to soaring energy costs.
Eurozone Imposes Surging Energy Burden On Taxpayers
Berlin joined the league of European countries that adopted passing on the payload of rising energy prices to future taxpayers. The policymakers raised borrowing costs so borrowers could bear the burden of high prices.
Some countries running a similar routine include Germany, the UK, and France. The last two countries boarded the train last week. Germany imposed the most burden on its citizens.
The reason behind this is Germany got affected by the Russia-Ukraine war on a large scale. Because ever since the conflict started, Russia disrupted supplies of gas products to Europe. And Germany has the most expansive economy in Europe.
Furthermore, the German government bears the risk of fixing demand at the same level as supply. With supplies from Russia out of sight, it is even more difficult. Before the war, Russia supplied 25 percent of Europe’s imports.
Although, it has swapped Russian products with commodities from several other countries. These countries include Norway, North Africa, and the USA. The US now delivers its liquefied gas product.
Notwithstanding, despite supplies coming from these countries, they cannot fill the gap Russia did utterly. Therefore, Germany cannot recover the losses incurred due to cutting ties with Russia.
