Germany wants to accelerate. The Government of Olaf Scholz could present this Monday, in the Council of Ministers, the text of the law that makes the 200,000 million additional credit authorizations available to a special fund, sources close to the Government said this Friday. This provision of 200,000 million euros will make it possible to subsidize the energy prices that threaten the purchasing power of households, the activity of companies and support the energy companies that are most dependent on Russian gas.
In the draft text consulted by AFP on Friday, Olaf Scholz’s government stresses the urgency of “mitigating the serious economic damage” that is hitting Europe’s largest economy due to rising energy prices.
A “downward spiral for the German economy”
The challenge is to avoid a “downward spiral of the German economy”, “structural economic ruptures, technological losses and social difficulties”, adds the text. The government’s concerns echo cries of alarm from economic leaders.
“We are threatened with a loss of prosperity on a hitherto unimaginable scale,” Peter Adrian, president of the organization of chambers of commerce and industry (DIHK), warned in an interview with the Rheinische Post on Friday. Gasoline prices in Germany are about ten times higher than in the United States, he noted, and the testimonials from German companies about the effects of this increase “are frightening.”
A recession deemed inevitable
The country’s entry into recession this winter is considered inevitable by experts concerned about the risks, in the medium term, of the country’s deindustrialization. In addition to the law that allows the financing of the support plan to be released, the Scholz government is awaiting the proposals of the expert commission in charge of shaping the energy price subsidy mechanism at the beginning of the week. In particular, the aid must be limited to a certain volume of consumption for individuals and businesses, beyond which the full market price will be applied again.
Several European Union officials have expressed concern about Germany’s initiative, accused of acting alone and increasing distortions of competition between countries.
Source: BFM TV
