Germany can no longer subsidize its own companies against the expensive energy
The German government has warned local authorities that the funds distributed since last year to mitigate the effects of the energy crisis will not become a new established norm.
“All of this burden-sharing is based on decisions made in exceptional political and economic situations,” Deputy Finance Minister Luise Hoelscher said in the ministry's regular monthly report, as reported by Bloomberg.
“It is clear that it cannot be the yardstick for facing future challenges,” added Hoelscher. "The financial situation of the federal government has indeed deteriorated significantly in recent years compared to the financial position of the states".
The German federal government ran a budget deficit of more than $130 billion in 2022 (€129.3 billion), largely due to pandemic relief and financial support for businesses, households and local governments following the energy crisis that hit the country last year.
Despite the aid, Germany's largest state, North Rhine-Westphalia, was forced to declare an emergency last November in order to be allowed to take on new debt to survive.
North Rhine-Westphalia, home to 20 of Germany's 50 largest companies, has declared an "extraordinary emergency situation" to be able to access further loans that would otherwise have been denied to the state due to a rule on the amount of debt a state can to contract.
Last year Germany allocated 270 billion euros, or about $290 billion, to protect consumers from the worst effects of the energy crisis, topping the list of European countries that have spent the most, including the UK .
The European Union's total bill for energy aid to businesses and consumers has come close to 700 billion euros, equal to about 720 billion dollars. Some EU member states did not like Germany's generosity, accusing it of gaining an unfair advantage for its businesses thanks to its deepest pockets. But Germany frankly didn't give a damn and, at least until now, has continued to finance its own companies.
Thanks to our Telegram channel you can stay updated on the publication of new articles from Economic Scenarios.
The article Germany can no longer subsidize its businesses against the high energy price comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-germania-non-puo-piu-sovvenzionare-le-proprie-imprese-contro-il-caro-energia/ on Tue, 21 Mar 2023 17:22:36 +0000.