Thursday, June 13, 2024
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Germany to fast-track disputed €200 billion energy fund

Sources said the legislation, including caps on power prices, could be presented to the cabinet as early as Monday.

The draft warns that if gas and electricity prices continued to surge without state intervention, “production stoppages for energy-intensive companies must be expected”, leading to a “downward spiral of the German economy”.

France and key members of the European Commission have voiced concern about a go-it-alone approach by Berlin.

They are calling for EU-wide solutions to the energy crunch, aggravated by war in Ukraine that has seen key supplier Russia turn off the gas taps.

Chancellor Olaf Scholz has defended the package against the criticism, citing the potentially crushing economic blow of energy shortages this winter.

He has also stressed that the €200 billion fund to finance support measures would be spread out over a few years until 2024.

The €200 billion is also to be pumped into an economic stability fund outside the government’s main budget, allowing the government to stick to constitutional debt rules that limit public deficits.

The head of the German Chambers of Commerce and Industry, Peter Adrian, underlined the need for extraordinary measures to weather the crisis in Europe’s economic powerhouse.

“We are threatened with a loss of prosperity on a scale that was unimaginable until now,” he told the daily Rheinische Post, noting that German gas prices were about 10 times as high as those in the United States.

“If we don’t get that under control in the short term, we’re going to have to say goodbye to a lot of companies and their employees before the end of the winter,” he said.

Germany, which has been highly dependent on imports of fossil fuels from Russia to meet its energy needs, has come under acute pressure as dwindling supplies from Moscow have stoked fuel prices.

The country expects to sink into a recession in 2023, leading economic institutes said last month, citing the impact of skyrocketing energy prices.

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