BERLIN (AP) – Germany’s coalition government has agreed to subsidize energy prices for heavy industry for the next three years as it seeks to breathe new life into the stubborn industry. slow economy This is putting pressure on Europe’s performance.
Chancellor Friedrich Merz said on Thursday night that he and other coalition leaders had agreed to introduce electricity prices of around 5 euro cents (6 US cents) per kilowatt hour from January 1 until 2028 to “support companies that use large amounts of electricity and face international competition.”
Merz said discussions on the plan with the European Union’s Executive Committee are almost complete and “we assume that permission will be granted.”
Germany’s economy, Europe’s largest, has been shrinking for the past two years and has not seen significant growth for a long time. The coalition government between the conservative Merz and the centre-left Social Democratic Party has made revitalizing the coalition a priority since it took office in early May.
Results have not yet been shown in terms of gross domestic product. stagnate In the third quarter. The government’s Independent Committee of Economic Advisers predicted this week that growth would be an unexpected 0.9% next year, compared to 0.2% this year.
The country’s manufacturing and export-heavy economy has been held back by multiple factors, including high energy prices, competition from Chinese auto and industrial machinery makers, a lack of skilled labor and excessive bureaucracy.
The government has launched programs such as encourage investment and set up a 500 billion euro ($581.4 billion) fund to funnel money into Germany’s crisis. Infrastructure for the next 12 years. The government has promised to eliminate red tape and accelerate the country’s lagging digitalisation.
ING economist Carsten Brzeski predicted current energy prices to be around 15 euro cents (17 U.S. cents) per kilowatt-hour, and said the planned subsidies “send a strong signal and could provide not only short-term relief for the industry, but also clarity and stability for years to come.”
Holger Loesch, deputy managing director of the Confederation of German Industry, said subsidized prices “will help especially energy-intensive industrial companies to remain internationally competitive,” adding that he hopes the EU will give Germany flexibility to reduce costs for many companies.
Finance Minister Lars Klingbeil estimated the expected cost of the measure at 3 billion to 5 billion euros ($3.4 billion to $5.8 billion).
Coalition leaders also agreed to cut taxes on airline tickets from July, a long-demanded move by the air transport industry. The measure requires parliamentary approval.
