Brussels warned of 'big dilemma' as Germany inflation cripples families


German politicians are being urged to respond to the economic crisis crippling their country as poorest families struggle to cope with rising inflation in the EU’s biggest economy.

Speaking on German political show Maybrit Illner, named after its host, Federal Finance Minister Christian Lindner (FDP) expressed confidence that the EEG levy would be abolished by the middle of the year.

Green Party politician Katrin Göring-Eckardt blamed the previous government.

Because of the lack of renewable energies, she said, Germany is now experiencing “fossil inflation”.

Consumer protectionist and business lawyer Annabel Oelmann made it clear that people do not only have problems with high electricity prices.

“The issue of tight budgets” dominated for many consumers.

CDU leader Friedrich Merz, also on the show, criticised the European Central Bank (ECB).

He said the ECB had to raise interest rates, but had “put itself in an almost hopeless situation”.

Ms Oelmann claimed that the situation is difficult for people who were struggling before the pandemic.

Many were still on short-time work, had lost their part-time job and at the same time had to pay for increased energy consumption because of working from home.

In addition, electricity costs have risen.

Customers of former low-cost electricity providers also faced problems.

These providers had run into difficulties and terminated their contracts – the consumers were moved to contracts with substitute suppliers, some of which were much more expensive.

Mr Merz calculated how expensive inflation can become. A family with an average income would pay €2000 more this year: “That’s how much a summer holiday costs.”

None of the guests wanted to say how long prices would continue to rise. What became clear, however, was that it will not be over in a few months.

Mr Merz added: ”We will probably experience this all year and beyond.”

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Mr Lindner wants to look at whether the price increases are only related to the pandemic or whether they will continue. “Action must be taken at least in the next few years,” said the FDP politician.

During the year, changes in taxes or levies were more difficult, he said.

Göring-Eckardt sees a fundamental problem.

The Green politician said: “We clearly have an inflation, a price development, which is based on the fossil age.”

In order to secure prosperity, she said, one would have to rely on renewable energies.

It could be that in five to ten years there will be cheap green energy, Mr Merz appeared convinced.

He said: ”But until then it will all still be pretty expensive.

Ms Oelmann suggested: “It could really be worthwhile to think about electricity tax cuts or also cutting the VAT on electricity.”

The consumer advocate called for a heating cost subsidy of €500.

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According to plans of the federal government, a subsidy of €135 is currently planned for housing benefit recipients.

BAföG [the credit/loan students receive] recipients will receive €115.

Mr Merz insisted that the ECB has a duty to raise the key interest rate.

Warning of a clash with Brussels, he said: “We will get into a pretty big dilemma in Europe.”

Other European countries had got used to “the sweet poison of cheap money”.

The ECB had put itself in an almost hopeless position. The increase in real estate prices was also related to this, he said. “The state cannot correct this, the legislator cannot correct this,” Mr Merz added.

Additional reporting by Monika Pallenberg



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