Germany in the face of the energy crisis: measures starting with hand washing

A natural gas storage and distribution facility in Germany (AFP)

The damage of the energy crisis, caused by the record jumps in natural gas prices in Germany, the largest economy in Europe, is deepening, despite successive government measures to face this damage, starting with instructions related to hand washing by citizens, and even direct intervention in the economy to prevent the collapse of companies.

The German government is struggling, through a series of decisions, to support the pockets of the citizens and prevent the economy from falling into recession, while dissatisfied voices are rising due to the high prices, who fear that these measures will merely palliative for him be, especially in light of expectations that the energy crisis will continue and its bill will rise for years to come.

The inflation rate in Germany rose sharply again last August, reaching 7.9% on an annual basis and 0.3% on a monthly basis, affected by the rise in energy and food prices in particular, according to data released today, Tuesday released by the Federal Statistical Office. .

A few days ago, the government unveiled an aid package worth 65 billion euros to ease the financial burdens on families caused by high energy bills

Inflation already touched these levels last May, then slowed to 7.6% in June and 7.5% in July, due to government measures to ease some of the burdens on citizens through discounts on petrol prices and reduced tickets for public transport on the Over the course of three months expiring at the end of August, economic analysts expect the inflation rate to rise to greater levels in the coming months, exceeding the 10% limits.

The state of pessimism also dominates investors, as a survey by the ZEW Research Institute showed that investor confidence fell more than expected in September as concerns about energy supplies grew.

The possibility of an energy shortage during the winter season made the outlook more negative for large sectors of German industry, Reuters quoted Achim Wambach, head of the institute, as saying.

The Ministry of Economy indicated in a report earlier that the economy could stagnate or contract during the second half of the year, saying that the outlook had “deteriorated significantly.”

The German Ifo Institute for Economic Research on Monday expected a recession during the winter and a rise in the inflation rate. According to a statement issued by the institute, gross domestic product will shrink to 0.3% next year, against expectations of 1.6% growth this year, and inflation will reach 9.3% in 2023.

“Gas supplies from Russia shrank over the summer and the resulting massive price increases hurt the economic recovery in the wake of the coronavirus,” said Timo Volmer Schweizer, head of forecasting at the institute. “We do not expect a return to normal until 2024 with 1.8 percent growth and 2.5 percent inflation. %”.

For his part, Clemens Fuest, head of the institute, said that in the future Russia will sell its gas and oil to other countries, and these countries will in turn buy smaller amounts of gas from other sources. “This gas will then flow to Europe,” he added. Call to support the economy in light of the energy crisis.

Extraordinary profits for energy companies

A few days ago, the German government unveiled an aid package worth 65 billion euros to ease the financial burdens on families caused by high energy bills, and indicated that it was considering a share of the exceptional profits achieved by energy companies, to use the financing of his plan.

The latest government aid package comes two days after Russian energy giant Gazprom announced earlier this month that it would not resume gas supplies through the main Nord Stream 1 pipeline.

The government previously offered two aid packages totaling 30 billion euros, which included the reduction of the tax on petrol and major financial support for transport tickets, as well as other amounts to support economic activity, the value of the aid packages provided since last year is, bring June to about 100 billion euros.

And Finance Minister Christian Lindner announced last month that his country would provide tax breaks worth 10 billion euros to help workers cope with rising inflation, while the government is currently studying measures that would intervene directly in the energy market to avoid a wave of bankruptcy of companies operating in the sector, according to what Lars Klingbeil, head of the ruling Social Democratic Party, in partnership with German Chancellor Olaf Scholz, said in statements to German radio last Sunday evening.

In addition to the aid packages, in recent months the government has approved measures that reduce energy consumption, to the extent that some of them include washing hands with hot water and determining the temperatures of heating devices in public administrations and buildings, calling on individuals and companies to follow suit.

Measure temperatures in the bedrooms

According to German Economy Minister Robert Habeck, “we don’t want to measure temperatures in the bedrooms and individual freedom must be respected,” but these measures “call on families to take responsibility and contribute” to reducing energy consumption.

According to government procedures, a maximum temperature of heating devices in public administrations and buildings has been set at 19 degrees, from the first of September. It has also been decided to stop operating heating devices in public areas such as corridors, as the government has said that these measures will help reduce gas consumption by 2%.

Once dependent on Russian gas for 50% of its consumption, this has now fallen to an average of 30%, and Germany has begun to look for diversified sources of gas from alternative routes, but the bill for that is rising dramatically.

According to the latest estimates, German households will have to pay around 3,500 euros ($3,498) for gas this year, almost three times what they paid last year.

The German Tenants Association recently warned that millions of citizens will not be able to afford the increased energy costs during the coming winter. Natural gas has turned into a weapon in the war between Russia and the West since Moscow’s forces invaded Ukraine on February 24, as Russia continues its push up the energy map to confront broad Western sanctions.

And Moody’s, the global credit rating agency, has ranked 6 countries in the European Union “most exposed” to the hypothesis that Russia will stop gas supplies to the bloc’s countries.

And the agency said in a report last month that the six countries were Germany, the Czech Republic, Hungary, Italy, Slovakia and Austria, pointing out that further reductions or halts in supplies would hurt growth and inflation in the bloc countries. increase, “and it will also increase the possibility of a crisis.” credit risk.

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