Olaf Scholz said that Government has made timely decisions to avoid a winter crisis, including filling gas stores and restarting coal power plants
The German Government has announced € 65 billion (U.S. $ 65 billion) package to ease the pressure on households as Russian gas supplies continue to fluctuate amidst rising energy bills.
The measures include a one-off payment of € 300 to millions of pensioners to help them cover rising energy bills. The Government will also target students with a smaller one-off payment of € 200 and a heating cost payment for people receiving housing benefits.
This brings the total support announced the German Government to its people to € 100 billions since Russia invaded Ukraine. The last 2 packages totalling € 30 billion included a reduction in the tax on petrol and a popular heavily subsidised public transport ticket. But with the expiration of many of those measures at the end of August 2022 and consumer prices soaring, the Government has been under pressure to provide new support.
Meanwhile, the inflation rose to 7.9% in August 2022, after falling for 2 straight months. The take-off in energy prices is expected to push inflation in Germany to around 10% by the end of the year, its highest rate in decades.
The Chancellor of Germany – Olaf Scholz said that Government has made timely decisions to avoid a winter crisis, including filling gas stores and restarting coal power plants.
German Government will use income from windfall taxes to lower end-consumer prices for gas, oil and coal. Scholz said the Government plans to tie certain social benefits to the current or expected inflation rate in the future and will earmark € 1.5 billion (U.S. $ 1.49 billion) for a discounted public transportation offer.
Taking it to twitter, Scholz tweeted (translated in English), “It’s about leading our country well through this time. It works like this:
- Short-term relief aid
- Structural changes to dampen further increases in energy prices
- Skimming off random profits for the energy industry #Entlastungspaket”
Original tweet in German:
Es geht darum, unser Land gut durch diese Zeit zu führen. Das geht so:
— Bundeskanzler Olaf Scholz (@Bundeskanzler) September 4, 2022
1. Kurzfristige Hilfen zur Entlastung
2. Strukturelle Veränderungen, um einen weiteren Anstieg der Energiepreise zu dämpfen
3. Abschöpfung von Zufallsgewinnen für die Energie-Branche#Entlastungspaket
Some energy companies which may not be using gas to generate electricity are simply using the fact that the high price of gas determines the price of electricity and are therefore making a lot of money.
The trimming of windfall profits would create financial headroom that should be used specifically to relieve the burden for consumers in Europe. The move could potentially bring “double-digit billions” of euros in relief. The Government said it would push for the move to be implemented across the European Union (E.U.), before going ahead with the measure on its own.
Meanwhile, the E.U. has said it would prepare emergency action to reform the electricity market and bring prices under control.
