While inflation has reached 10 % across the Rhine, the German government announces the implementation of a price shield that will benefit consumers and businesses.
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Berlin finally decided to hit hard against the flight prices. Thursday, September 29, the government of Olaf Scholz announced an envelope of 200 billion euros, which should be used to mitigate the effects of the rise in gas prices on consumers and businesses. A “defense shield” in the face of the “energy war” launched by Moscow, said the Chancellor, Olaf Scholz, the Minister of the Economy, Robert Habeck, and that of finance, Christian Lindner, during a press conference. The fund created is the largest aid plan adopted by the government since the start of the energy crisis.
Since the explosions that have damaged the two Nordstream pipelines, “it has become clear that Russia will no longer deliver gas in the foreseeable future,” said Chancellor, Olaf Scholz, broadcast by video during the press conference, to cause of a SARS-COV-2 infection. He described the package of measures as a “double vroum”, taking up the expression, supposed to suggest the roar of an engine, which he had already used in spring 2020 when, Minister of Finance, he had announced a support plan to counter the effects of the pandemic. The envelope was then 130 billion euros, it had surprised the observers by its magnitude. With 200 billion, the new “Vroum” plan is not mathematically double the first, but it wants to create a similar effect on businesses and opinion, as well as on the markets.
It was time. For six weeks, government’s lifesime in the energy crisis have cost him a lot of political credibility. The gas tax of 2.41 cents per kilowatt hour, announced in mid-August to avoid the collapse of the energy system, concentrated frustrations and will ultimately not come into force. On the economic front, the perspectives have degraded strongly. Thursday, September 29, the major economic institutes announced a recession of 0.4 % in 2023, while many companies reduced their production because of energy prices. A week after the nationalization of the Uniper energetician, Berlin seems to have accepted the idea that the seriousness of the situation justifies more direct state interventions in the economy.
system of “contingent contingent “
The proposed instrument is called “brake at the price of gas”: it must lower the price of this energy, but not in an unlimited manner. A “contingent” system will be created, in order to subsidize basic consumption for all consumers and businesses, beyond which the market price will be fully applied again. The exact operation of this system must be determined by a commission of experts, which will make its conclusions in mid-October.
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