Ukraine War: Germany to Cover Energy Bills as Gas Prices Soar

Workers knead piles of dough flecked with raisins inside Dresden’s Kexerei bakery as the air is warm and buttery. Even though it’s the busiest time of year, the company’s expenses are rising, just like in every other home and business across the nation, which lessens the holiday spirit.

“Wages have increased drastically, energy costs have risen, as have the prices for our ingredients – butter has doubled in price,” says owner Matthias Walther. “All of that cannot be passed on to the clients.”

The German government is also troubled by this issue. Aware of the effects on the economy, it is investing about €300bn ($310bn; £260bn) in policies designed to protect people and industry from higher prices, particularly soaring energy costs.

A third of that amount has already been spent, and another €200 billion is anticipated to be spent in the upcoming months.

The assurance that all homes and small businesses will have their monthly gas bills paid in December is possibly the most eye-catching. The amount will be determined using an average monthly September bill, so in practice that won’t cover the entire cost.

Benefits have increased, and nearly everyone has received a $300 lump sum payment.

The cost of gas and electricity will also be capped starting in January. Government subsidies will let families and small businesses pay less for 70% of their electricity use and 80% of their gas use.

For instance, a family of four renting a 100 square-meter apartment last year would have had to pay a monthly gas bill of 100 euros. That amounts to 275 euros. A government estimate indicates the family will pay €175 starting in January when the cap takes effect.

Bills for the industry will be capped by a similar subsidy program.

With his domestic approval ratings at their lowest point since taking office, Chancellor Olaf Scholz is undoubtedly hoping for a boost. His spending plans, however, haven’t been well received by his EU neighbors, in part because Germany has resisted calls for an EU-wide gas price cap.

Some of Mr. Scholz’s EU colleagues wonder if he is merely trying to prioritize Germany.

“I think the opposite is the case,” says Martin Dulig the minister of the economy for the state of Saxony, whose capital city is Dresden.

“Europe’s stability is the goal here. Europe’s stability is significantly influenced by Germany. The economic centers of the world have shifted; just look at America and China. Europe must make sure to keep up.”

The area where Mr. Dulig is elected to represent is the former communist east of Germany, where public dissatisfaction with policy is typically higher than elsewhere in the nation.

“The mood is still difficult because we have a serious situation,” says Mr. Dulig. “First and foremost, a social issue is in front of us. If a pensioner, who receives only €850 per month, receives a €500 energy bill, she will undoubtedly be unable to pay it. She needs help, so it’s crucial.”

The plans aim to strike a balance, but most people will still have higher energy costs despite the assistance. Not least because the government needs businesses and households to reduce consumption as it struggles to find alternative energy sources after years of being heavily dependent on Russia.

Although the country’s gas supplies may be full for the time being, the energy network agency says a 20% decrease in national consumption is required to successfully navigate the winter.

The question for many people at Dresden’s main Christmas market, which reopened this year after a pandemic pause, is therefore not so much how to stay healthy as it is how to pay those bills.

Sabine, a pensioner, says: “Our needs cannot be met by the government. Despite their assurances that assistance is on the way, nothing is done.”

Jan, a young father, says he thinks the family will be OK, but “the gas bill hasn’t arrived yet, let’s see how it looks when it comes.”

Matthias Walther is also waiting and watching in his bakery as loaves of Stollen, the fruit bread that is this area’s specialty for Christmas, rise in the oven.

He claims it’s unclear how much assistance he’ll receive at this time. For instance, his oven uses oil, and despite the fact that his bill has tripled, there is no planned government subsidy to lessen the burden.

He claims that the future is very uncertain. He believes and hopes that his own company will continue to exist. He cautions that many others could fail.

Reference: https://www.bbc.com/news/world-europe-63814656