To ease inflation in the country, Germany’s ruling coalition has agreed on a $65 billion inflation relief package. Reportedly, the package will help reduce the financial strain on households as Russian gas supplies remain halted with no timeline of resumption laid out by Moscow.
This is the third relief package to be doled out by the German government which takes the total to $95 billion. This particular relief package will include tax breaks for energy-intensive companies and cheap public transport for the citizens of Germany.
Moreover, under the plan, a $300 one-off payment will be provided to millions of pensioners to battle the soaring energy bills. Similarly, students will be given a slightly smaller $200 one-off payment. Those receiving housing benefits will also receive some kind of monetary help for the rising heating costs.
However, the biggest talking point is the $1.5 billion earmarked for public transport. Earlier, Germany had launched a $9 monthly ticket for travel in local and regional transport systems which was a huge hit. The Deutsch government is planning a successor to this scheme which will be priced slightly higher than its previous iteration.
“Timely and proportionate relief for citizens and businesses is necessary due to the rapidly increasing burden of high energy prices.” Germany’s coalition partners were quoted as saying by AFP.
Meanwhile, German Chancellor Olaf Scholz in response to the new package said his government had made ‘timely decisions’ and that, “We will get through this winter.”
It is pertinent to note that inflation in Germany rose to eight per cent in the month of August, primarily due to the reduction in gas supplies.
We are better equipped: Olaf Scholz
However, a day before the shutdown of the Nord Stream 1 gas pipeline, Scholz added that his country was prepared to deal with the Russian threat of gas.
“Germany is in a much better position in terms of security of supply than was foreseeable a couple of months ago. We can deal well with the threats we are confronted with from Russia, which uses gas as part of its strategy in the war against Ukraine.”
Read more: We are in better position to counter Russia’s gas threat, says Olaf Scholz
Meanwhile, Economy Minister Robert Habeck stated that Germany had filled its gas reserves to almost 83 per cent.
“Germany’s gas storage facilities are nearly 83 per cent full and will hit 85 per cent full in early September. As a result, the markets will calm and go down” said Habeck.
Germany is dependent on Russia for its energy needs
Despite talking tough against Russia, Berlin still hasn’t been able to get rid of Russian oil and gas, which accounted for more than 55 per cent of its requirement in 2021.
Moreover, since February, the supplies from Russia have been reduced by more than 30 per cent, leading to an acute energy crisis in the country, with the price of oil and gas rising by almost four per cent compared to last year.
Germany, akin to several other European nations is scampering for alternatives and looking to build reserves. However, the process is lengthy and one that cannot be achieved over the course of a few months.
(With inputs from agencies)
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