Germany's 200bn injection

Germany yesterday revealed a €200bn «protective shield» for businesses and consumers struggling with soaring energy bills, as inflation in Europe’s largest economy soared to double digits for the first time in more than 70 years. Since the start of the energy crisis, the most extensive aid package adopted by a European government will include an emergency cap on gas and electricity prices, to be financed by new borrowing. «The government will do everything it can to ensure that happens.» He described the package as a «double ka-boom» that would help everyone, from pensioners to big companies, pay their energy bills. The move to cap energy costs came as Germany’s statistical agency said inflation hit a seven-decade high of 10.9 per cent in September, accelerating from 8.8 per cent in August.

Economists expect the increase in German prices to lift overall eurozone inflation to a new record of 9.7 per cent today. German energy prices rose 43.9 per cent in the year to September, accelerating from 35.6 per cent growth in August, while food prices surged 18.7 per cent, against 16.6 per cent a month earlier. As a result, Germany’s top institutes said the economy would expand by 1.4 per cent this year, contract by 0.4 per cent in 2023 and grow by 1.9 per cent in 2024. But they also warned that the economy could shrink by 7.9 per cent next year in the event of a freezing winter and gas rationing in industry.

Berlin has accused Russia of «weaponising» its energy exports since it launched its full-scale invasion of Ukraine in February. However, Robert Habeck, economy minister, insisted that energy use still needed to be cut. «While we’re willing to spend a lot of money to bring down prices, there is still a need to save energy».

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