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POLITICS

EU ministers urge unity after Germany’s energy ‘bazooka’

EU finance ministers on Monday pleaded for unity after Germany announced a €200 billion plan to help German households and businesses pay for high energy prices, amid accusations that the EU's biggest economy was acting alone.

The European and German flags wave in the wind in front of the Reichstag in Berlin.
The European and German flags wave in the wind in front of the Reichstag in Berlin. Photo: picture alliance / dpa | Kay Nietfeld

Europe is struggling with historically high energy prices as it faces an early autumn cold snap and a coming winter almost certainly to be endured without crucial Russian gas supplies because of the war in Ukraine.

Many EU countries have announced national programmes to shield consumers from the high prices. But Germany went the furthest on Friday when it announced its mammoth plan, which will see help pouring to Germans for two years.

Arriving to talk with his eurozone counterparts, German Finance Minister Christian Lindner insisted the spending was “proportionate” to the size of Germany’s economy and said his goal was to use as little of the money as possible.

READ ALSO: Germany to spend €200 billion to cap soaring energy costs

But Germany’s largesse rankled several EU capitals, some of which feared their industries could take severe blows while Germany’s sits protected, deforming the EU’s single market.

Outgoing Italian prime minister Mario Draghi has slammed Berlin for its lack of solidarity and coordination with EU partners.

French Finance Minister Bruno Le Maire, without directly criticizing Berlin, called on partners to agree a common strategy against the price shock and for countries to refrain from going it alone.

“The more this strategy is coordinated, united, the better it is for all of us,” he said.

Risk to ‘European unity’

Others pointed to the unprecedented solidarity shown in the Covid-19 crisis in which the 27 EU nations, against all expectations, approved a jointly financed €750 billion recovery plan.

“Solidarity is not only on the German shoulders, I think this is something that we have to deliver at European level,” said EU economics affairs commissioner Paolo Gentiloni.

“We have very good examples from the previous crisis on how solidarity can react to a crisis and also reassure financial markets. I think that this is our goal,” he said.

While a Covid-style recovery plan is not in the cards for now, Le Maire said €200 billion in loans and €20 billion in aid should be devoted to REPowerEU, a programme to help countries break their dependence on Russian gas.

READ ALSO: Will Germany set a gas price cap – and how would it work?

Bruegel, a highly influential think tank in Brussels, called the German plan a spending “bazooka” that many EU countries were unable to match, creating a potential source of animosity.

“If the German gas price brake gives German business a much better chance to survive the crisis than, say, Italian business, economic divergences in the EU could be deepened, and European unity on Russia undermined,” it said in a blog.

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POLITICS

Germany’s Scholz rejects calls for later retirement in Labour Day message

German Chancellor Olaf Scholz (SPD) has rejected calls for later retirement in a video message for Labour Day published on Wednesday.

Germany's Scholz rejects calls for later retirement in Labour Day message

“For me, it is a question of decency not to deny those who have worked for a long time the retirement they deserve,” said Scholz.

Employees in Germany worked more hours in 2023 than ever before: “That’s why it annoys me when some people talk disparagingly about ‘Germany’s theme park’ – or when people call for raising the retirement age,” he said.

Scholz also warned of creating uncertainty due to new debates about the retirement age. “Younger people who are just starting out in their working lives also have the right to know how long they have to work,” he said.

Scholz did not explicitly say who the criticism was targeted at, but at its party conference last weekend, the coalition partner FDP called for the abolition of pensions at 63 for those with long-term insurance, angering its government partners SPD and the Greens.

Scholz saw the introduction of the minimum wage nine years ago – and its increase to twelve euros per hour by his government – as a “great success”. “The proportion of poorly paid jobs in our country has shrunk as a result,” he said.

READ ALSO: EXPLAINED: Is it worthwhile to set up a private pension plan in Germany?

However, he said there were still too many people “who work hard for too little money,” highlighting the additional support available through housing benefit, child allowance and the reduction of social security contributions for low earners.

“Good collective wage agreements also ensure that many employees finally have more money in their pockets again,” he added. 

And he said that the country wouldn’t “run out of work” in the coming years.

“On the contrary! We need more workers,” he said, explaining that that’s why his government is ensuring “that those who fled to us from Russia’s war in Ukraine get work more quickly.”

Work means “more than making money,” said Scholz. “Work also means: belonging, having colleagues, experiencing recognition and appreciation.”

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