State aid to mitigate the high prices for gas and fuel

In view of the high prices for food, gas and fuel as a result of the Ukraine war, the SPD in the Bundestag is bringing up special payments to employees to secure their livelihood.

Economic experts called for more targeted aid for those in need. The fronts within the traffic light coalition remain hardened in the dispute over a possible suspension of the debt brake due to the current burdens.

Chancellor Olaf Scholz (SPD) wants to work with partners in the G7 countries to find solutions to the energy crisis and rising inflation. “Many things that we buy have become more expensive. Food, but especially the prices for energy. We notice that at the gas station, we notice that when we have to pay the heating bill. Heating oil, gas, everything is much more expensive than it was a year ago. That’s why we have to prepare for it,” said Scholz in his video message “Kanzler compact” published on Saturday before the G7 summit in Elmau. Germany must agree with others what needs to be done.

Mützenich: “Will not be able to cushion everything.”

SPD parliamentary group leader Rolf Mützenich brought special payments to employees to secure their livelihood into play. “If employers and unions agree on one-off payments to employees in order to cushion particularly difficult moments in the coming months, then the state could also usefully supplement this,” he told the newspapers of the Funke media group. However, he also emphasized: “We will not be able to cushion everything.” Chancellor Scholz wants to hold a “concerted action” on July 4th together with top representatives of employees and employers to discuss how price developments can be brought under control.

The government is already trying to relieve the burden on citizens with the tax reduction when filling up, the 9-euro ticket, a flat-rate energy price in September/October and other measures. Economists are calling for more targeted use of aid. With regard to the tank discount, the “economic wise man” Veronika Grimm said of the German Press Agency: “An attempt was made to make fossil fuels cheaper – with moderate success. You have to cushion that for those who cannot bear this hardship.” Marc Schattenberg, economist at Deutsche Bank Research, also warned: “The support for needy households could be even more targeted than last.”

Lindner wants to comply with the debt brake in 2023

Federal Finance Minister Christian Lindner made it clear that the state could not absorb every price increase. “Further relief measures would have to move within the framework of the debt brake,” affirmed the FDP politician in the “Rheinische Post”. He emphasized that in an economic downturn, higher borrowing is also permitted. Lindner will present his draft budget to the cabinet on July 1.

Bank President Christian Sewing described it as “important that the debt brake is maintained in the medium term.” The Deutsche Bank boss told dpa in his capacity as President of the Association of German Banks (BdB): “The attitude of a government to sticking to agreements and fulfilling the goals that have been set is enormously important for the trust of the market.” “In the long term, we will all benefit from the debt brake. But you also have to keep an eye on the current situation, and then it can make sense to act a little more flexibly for the time being.” As an example, Sewing cited the special fund for defense.

The debt brake, which has been anchored in the Basic Law since 2009, only allows the federal government to make new loans to a limited extent. In 2020 and 2021, the federal government made use of the exceptional regulation to be able to temporarily suspend this instrument in emergency situations due to the high burden resulting from the corona pandemic. In 2023, Lindner wants to comply with the debt brake again.

The Greens see it differently. “In times of crisis, austerity is the wrong tool. Unfortunately, in 2023 we will very likely have to contend with the massive consequences of the Ukraine war, fossil inflation due to increases in gas and oil prices and the corona pandemic,” said Green budget spokesman Sven-Christian Kindler of the “Rheinische Post”.