The third traffic light relief package at a glance

by time news

Mith deep circles under the eyes and with visible relief, the traffic light coalition presented the third relief package on Sunday morning in the Chancellery. That didn’t stop Chancellery Minister Wolfgang Schmidt (SPD) from smugly tweeting: “Sleep is overrated.”

Heike Schmoll

Political correspondent in Berlin, responsible for “Bildungswelten”.

After 22 hours of negotiations, all partners got something: the Greens an increase in child benefit and the prospect of a nationwide ticket for local public transport, the FDP the reduction of the cold progression and the relief of the middle through the full deductibility of pension contributions from next year and the SPD the siphoning off of the so-called chance profits of the energy companies, as well as the clear expansion of the entitlement to housing benefit and the introduction of a citizens’ benefit.

The chancellor did not hide the fact that cutbacks are imminent in Germany as a result of the war in Ukraine. “Our country is facing a difficult time,” said Federal Chancellor Olaf Scholz (SPD), only to then reassure him several times in an almost fatherly manner in modern German, “you’ll never walk alone” or “we won’t leave anyone alone”.

Even before the negotiations, it was clear to the traffic light coalition that the third relief package would have to be particularly massive. It is estimated in the 13-page decision paper at 65 billion euros. Together with the first and second package, the relief amounts to a total of 95 billion euros. “That’s a lot that we move. It is necessary,” said the Chancellor.

Relief package costs 65 billion euros

Federal Finance Minister Christian Lindner (FDP) hastened to assure that the necessary 32 billion euros from the federal budget are within the scope of the previous budget planning, i.e. can be financed without additional new borrowing. “We live in peace and are able to act,” he said, referring to Ukraine’s existential concerns about sheer survival.




However, Lindner considers the estimated total volume of 65 billion euros to be a “conservative estimate”, and “depending on developments, we may even be higher,” said Lindner. With the skimming off of the chance profits and the electricity price brake, the market is being intervened.

In the European Union, emergency measures have been discussed for several weeks to correct the imbalance in the electricity market, curb prices and protect consumers. Although the production costs do not change for most electricity producers, such as renewable, coal or nuclear power, their profits are enormous because the price of electricity is linked to the price of gas. By partially skimming off such chance profits, the state wants to gain financial leeway in order to relieve consumers.

In Germany, the infrastructure of the EEG surcharge can be built on, according to the decision paper. For this purpose, a maximum value for revenue on the spot market is set, the difference between the wholesale price and the revenue cap is paid to the distribution network operator, which limits random profits. If an agreement with the EU does not succeed, the federal government will implement the adjustment alone, Scholz assured. However, economists fear that other countries could then increasingly buy electricity in Germany at reduced rates. It should also be possible for companies outside the electricity market to siphon off random profits.

Incentive to save energy

With the so-called electricity price brake, all households should be credited with a certain amount of electricity at a reduced price (basic consumption). The traffic light expects a noticeable relief from this and at the same time an incentive to save energy. This utility tariff should also apply to small and medium-sized companies. For energy-intensive companies that cannot pass on their energy costs, the existing support programs for companies are to be extended until December 31 of this year. These included the KfW special program Ukraine, Belarus, Russia (UBR) with low-interest loans and federal and state guarantee programs and the energy cost containment program to relieve particularly energy- and trade-intensive companies.

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