Germany releases tens of billions of euros to dampen inflation

Germany releases tens of billions of euros to mitigate inflation

German Chancellor Olaf Scholz announced a series of measures to deal with inflation and the energy crisis, totaling 65 billion euros.

The German government announced on Sunday a massive new aid plan for purchasing power, to mitigate the effects of inflation, through measures totaling 65 billion euros (about 85 billion Canadian dollars) and after laborious discussions within the coalition of Olaf Scholz.

The Social Democrat, at the head of a coalition formed with environmentalists and liberals, had brought together the main figures of the government on Saturday, until late in the evening, to finalize this plan, which had been awaited for several weeks.

Repeating his mantra that the Germans will never be alone in the face of the energy crisis, Olaf Scholz unveiled a series of measures, including a one-time energy check of 300 euros for millions of pensioners and 200 euros for students.

Inflation rose again in Germany in August, to 7.9% year on year, still driven by soaring energy prices in the wake of the war in Ukraine.

In October, a tax on gas intended to avoid the bankruptcy of German energy groups must come into force. It will lead to a further increase in the energy bill.

The boss of Germany's central bank, the Bundesbank, has deemed inflation likely to reach 10% by the end of the year, a first since the 1950s.

As in other European countries, the rise in prices is fueling public concern and calls for demonstrations, mainly at the initiative of the extreme right or of the extreme left, worry the government.

Since the beginning of the Russian invasion of Ukraine at the end of February, the government of Olaf Scholz has already released two sets of household aid totaling some 30 billion euros ( approximately 39 billion Canadian dollars).

Christian Lindner, German Finance Minister.

The announcement of this new plan has been postponed several times, illustrating the friction between the three parties of the ruling coalition for nine months.

Symbol of the difficult compromise found: Olaf Scholz's pledge to tackle speculation in the energy market and the windfall profits made by producers profiting from record gas prices, in the words of the Chancellor .

This question has divided the government since the beginning of the summer. Ecologists and social democrats want a tax on the billions earned by certain groups. The liberal camp, represented by Finance Minister Christian Lindner, is fiercely opposed to it.

The government has finally decided to plead for the introduction, at European level, of #x27;a mandatory contribution to be paid by companies in the energy sector, a measure that is not a matter of tax law, said Mr. Lindner.

European Union member states are due to meet next week to discuss reform of the European energy market, and possible initiatives to quickly reduce consumer bills.

The German government says it is ready to go it alone if no agreement is reached at European level, but Olaf Scholz said he was confident in the possibility of an agreement between the Twenty -Sept.

This compulsory contribution could bring in several tens of billions of euros, assured the Minister of Finance.

The government also provides for payment of heating costs for people benefiting from x27;housing allowances and an envelope of 1.5 billion euros to set up a new rebate on public transport.

This is to replace the popular nine euro monthly pass that Germans were able to enjoy until the end of August on the entire bus and train network, excluding high-speed lines.

The financing of this new ticket would be borne by the State and the regions and the future subscription should cost between 49 and 69 euros (between 64 and 90 dollars).

In Europe's largest economy, the threat of gas shortages this winter seems to be receding. The country is struggling to reduce its dependence on Russia, which was still supplying it with 55% of its gas imports in February, and considers that its efforts are starting to pay off.

D& #x27;the installation of several floating terminals allowing the import of liquefied natural gas (LNG) has experienced a marked acceleration, the country has diversified its suppliers and relaunched coal-fired power plants.

We will be able to face this winter, assured Olaf Scholz, despite the prolonged stoppage, announced Friday by the energy company Gazprom, of the Nord Stream gas pipeline which connects Russia to the north of the Germany.

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