German minister gives ‘bitter’ truth: High energy prices here to stay

May 3, 2022

Consumers in Germany must prepare for high energy prices in the long term, Economics Minister Robert Habeck warned on Monday.

“We will have to continue to reckon with higher prices,” Habeck said in Berlin, noting the state could not absorb all energy price increases – neither for companies nor for consumers.

“That is the bitter and the hard truth.”

He said the federal government has set up various aid programmes to ensure liquidity and keep energy suppliers in the market.

“But they cannot – and I can’t spare anyone this hard message – they cannot prevent prices from being passed on,” he said after a meeting with associations of small- and medium-sized businesses.

Robert Habeck, German Minister for Economic Affairs and Climate Protection, speaks during a press conference at the Federal Ministry for Economic Affairs and Climate Protection following a meeting with associations of small and medium-sized businesses, which focused on the current war situation in Ukraine as well as the EU sanctions and the associated impact on the German SME sector. Photo: Bernd von Jutrczenka/dpa

Most companies have long-term contracts that have locked in prices, he said. That means a number of firms would not feel the consequences until 2023 – and prices for some products would only rise at that point.

An aid package from the German government includes a loan programme via the state development bank KfW, as well as energy cost subsidies for companies.

But Habeck said direct subsidies are tied to very strict conditions. His ministry believes that around 4,000 companies could be eligible for these grants, a fraction of the total companies in the country.

The economy is currently under enormous pressure, he said. In addition to the turbulence in energy markets, there is a glaring shortage of skilled workers. Supply chains have also become fragile due to the war in Ukraine and the coronavirus pandemic.

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