A one-time increase in child benefit, lump-sum compensation for energy costs – the German government wants to launch a multi-billion euro aid package. However, this support is insufficient, according to the EU.
Germany expected to see weaker economic growth than originally planned
War has been raging in Eastern Europe since February, with effects also affecting the West. With energy prices soaring, the federal government now wants to decide on a multi-billion euro aid package for citizens. At the same time, Economy Minister Robert Habeck (Greens) fears weaker economic growth in Germany.
The package aims to reduce the energy tax on fuel for a limited period of three months. Working people who are subject to the tax are to receive a one-time allowance of 300 euros gross to compensate for high energy costs. Starting in June, a €9 monthly ticket for local and regional transport is to apply nationwide for three months. Family allowance is to be increased by €100 per child at a time.
The funds for this are in the supplementary budget, which includes almost 40 billion euros of additional debt. Ukraine will receive money to buy additional weapons. The federal states and municipalities will receive two billion euros to receive and care for refugees from Ukraine.
The heads of the SPD, Green and FDP coalition agreed in late March on a second aid package. The first package was already approved in February. It provides, among other things, for the abolition of the EEG surcharge to support green electricity from July.
Union has bigger demands
The Union Party has also asked the federal government for a comprehensive package to help the economy. In the Bundestag proposal, the CDU/CSU faction advocates, among other things, a “burden moratorium,” tax breaks and more flexible labor laws. The competitiveness and sustainability of the economy should be strengthened. The proposal is to be discussed in the Bundestag on Thursday.
Habeck warns of low economic growth
Habeck plans to present his spring economic growth forecast in Berlin this afternoon. He estimates gross domestic product growth of only 2.2%, as previously reported by government circles. In its annual economic report in January, the federal government still expected growth of 3.6%. However, uncertainty due to the war is high.
After two years of a coronavirus pandemic, the war has come, and with it a new burden with “significant risks” – especially with regard to price pressures and supply chains. A worsening of the current situation, primarily in energy supply, could again dampen economic expectations. The spring forecast is for 2.5% growth in 2023.