Record debts from the war
Energy cost subsidy for companies costs five billion
4/8/2022, 4:02 p.m
The federal government decides on billions in corporate aid: companies should be able to apply for a subsidy for increased electricity costs of five billion euros and government loans of 100 billion euros. Finance Minister Lindner expects an additional 24 billion for the war.
The federal government wants to set up a billion-euro “protective shield” for companies that are burdened by the consequences of the Ukraine war and high energy prices. A package of measures provides, among other things, for a “temporarily limited and narrowly defined” cost subsidy to temporarily contain the costs of the increase in natural gas and electricity prices for companies that are particularly affected. This was announced by the finance and economics ministries in Berlin in the afternoon. Finance Minister Christian Lindner from the FDP said that this subsidy is expected to cost taxpayers five billion euros.
In addition, there should be a loan program for polluted companies through the state development bank KfW with a volume of up to seven billion euros and guarantees. A financing program for companies threatened by high security payments is also planned. The federal government wants to develop standardized criteria to grant companies short-term credit lines from KfW that are backed by a federal guarantee. A total credit volume of up to EUR 100 billion is planned for this purpose.
Record debt in the supplementary budget
Lindner said damage from the aftermath of the war on the German economy should be limited. “We want to cushion hardships and prevent structural breaks.” He spoke of an economic policy “shock absorber”. But the aid is on target, and taxpayers’ money will be used carefully. The package is easy on the taxpayer and very effective for the economy.
Economics Minister Robert Habeck from the Greens also emphasized that the package was on target and should also avoid false incentives. Not all hardships are taken away. Companies would also have to bear a burden as a result of the war. You will not get through this time without losses. However, the aid for companies could increase if the situation worsens. According to the government, the measures should be introduced on June 1st and be limited to this year.
The supplementary budget with the costs for the consequences of the war in Ukraine will probably have a total volume of at least 24 billion euros, Lindner calculated. Of this, 17 billion euros are intended for the second relief package because of the high energy prices. In addition, there is now the five billion grant for the companies and two billion for the countries because of the reception of refugees from Ukraine. Possible humanitarian aid abroad or aid for the Ukrainian army cannot yet be quantified.
Lindner wants to bring the supplementary budget into the cabinet at the end of April. With the volume already mentioned, the federal government is heading towards record debt this year.