Germany’s government says it will spend up to €200 billion to help consumers and businesses cope with rising energy prices.
Chancellor Olaf Scholz announced on Thursday that the government is reactivating an economic stabilising fund and “will do everything it can” to bring prices down.
Prices for natural gas — used to heat homes, generate electricity, and power factories — have surged across Europe amid Russia’s invasion of Ukraine.
Germany previously used the so-called “defensive shield” to support the country during the global financial crisis and the COVID-19 pandemic. The fund will cap the price German customers pay for gas and relieve them from inflation.
A previously proposed surcharge that was meant to help spread the rising cost of purchasing fuel on the global market is now being dropped.
“One could say this is a double-whammy,” Scholz told a news conference by video link.
Scholz said recent leaks on two pipelines further showed that Russian energy supplies couldn’t be expected in the near future.
“We’re well prepared for this situation though,” he said. “We have taken decisions that allow us to deal with this.”
Finance Minister Christian Lindner insisted that the economic stabilising fund meant Germany would not be following the UK’s path.
The British government recently announced tax cuts funded by borrowing, despite plans to spend billions shielding homes and businesses from soaring energy prices. The move resulted in a sharp fall in the pound.
Germany is paying a high price for its dependence on Russian gas, which accounted for 55% of its gas imports before the war in Ukraine.
“We cannot accept this and we are fighting back,” he told the news conference, adding that the new aid measures as “a clear response to Putin”.
The German government has already unveiled support measures totalling around €100 billion.