Federal government aid package
Economists warn against falling energy prices
04/23/2022, 09:40 am
The federal government wants to reduce the energy tax rates on petrol and diesel from the beginning of June to the end of August and help companies suffering from high energy prices. That doesn’t go down well with everyone. Economists are now warning of the consequences that such an aid package could bring.
To combat the energy crisis, leading economists speak out against the planned tax cut on fuel and the announced aid package for companies – and warn of dangerous consequences. “Such blanket subsidies prevent adjustments,” said Sebastian Dullien, scientific director of the institute for macroeconomics and business cycle research (IMK), which is close to the trade unions, the “Spiegel”. “As a result, we will eventually have real shortages – and then we have to ration by decree.”
The economics professor Veronika Grimm also considers the price mechanism to be “important so that gas is saved or substituted in the right places”. Due to the high prices, it could happen “that production is relocated abroad and does not come back,” said Grimm, who is a member of the German government’s Advisory Council. “You then have to ask yourself where you have to accept migration and where you should counteract this for strategic reasons, for example in steel production.”
The federal government wants to temporarily reduce the energy tax rates on petrol and diesel from the beginning of June to the end of August and also help companies suffering from high energy prices. The package includes a loan program through the state development bank KfW and energy cost subsidies for companies that are particularly affected. Grimm would like politicians to provide more incentives for consumers to save energy. “You need an energy efficiency action plan now. Not enough is happening there,” she told the “Spiegel”. “We should also implement a speed limit, even if it’s primarily a symbolic gesture. We have to signal to the population how explosive the situation is.”
Dullien is also in favor of interventions in road traffic: He finds it “strange how the debate about a speed limit and car-free Sundays is being conducted,” said the economist. It is about “smaller effects”, but these would at least reduce a possible supply gap.