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ENERGY

German government set to scrap gas and electricity price caps

Price freezes on gas and electricity sold in Germany will terminate on December 31st, following a ruling from the country's Constitutional Court. 

The German Government is set to scrap price freezes on gas and electricity by the end of the year.
The German Government is set to scrap price freezes on gas and electricity by the end of the year. (Photo by INA FASSBENDER / AFP)

Price caps on gas and electricity in Germany will be “terminated at the end of the year”, according to the country’s Finance Minister. 

The announcement, made during an interview with Deutschlandfunk radio on Friday, means consumers are likely to see their energy bills go up, from the current limit of €0.40 per KwH for electricity and €0.12 per KwH for gas.  

The prize freeze was introduced last year to help consumers and businesses deal with rising prices triggered by the war in Ukraine. As recently as November, the Bundestag had agreed to extend the price cap through to March 31st. 

It was financed through the €200 billion Economic Stabilisation Fund (WSF), initially set up by the Government to help companies and pay for public health measures following the outbreak of the Coronavirus pandemic. 

The VAT reduction that the Bundestag had agreed for gas heating by the end of March is also in danger of being cancelled. 

Why are price caps ending?

The German Constitution limits budget deficits to 0.35 percent of GDP. This so-called ‘debt brake rule’ can only be circumvented in exceptional circumstances and was suspended during the pandemic. 

Earlier this month the Constitutional Court ruled that Chancellor Olaf Scholz’s government had acted illegally by allocating funds initially earmarked for the pandemic response to climate sending. 

Following this shock ruling, a spokesperson for the Chancellor said “all special funds will now have to be looked at and assessed.”

What has been the reaction? 

The SPD, one of the major parties in Germany’s ruling coalition, has criticised the move to end the price freezes. 

“With the price brakes, we are giving millions of households and companies security against excessive energy prices,” said deputy parliamentary group leaders Matthias Miersch and Verena Hubertz. 

Kerstin Andreae, Chairwoman of the Executive Board of the German Association of Energy and Water Industries (BDEW), also called it a “wrong decision”.

“For the coming winter months, an extension would be an important signal of stability and security to consumers,” she told taggeschau.de

The German Federation of Consumer Organisations (VZBZ) said  that the “current chaos surrounding the federal budget” should not be at the expense of consumers. “Private households will therefore face significantly higher prices,” said Executive Director Ramona Pop.

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For members

GERMAN CITIZENSHIP

German conservatives vow to overturn dual citizenship if re-elected

Foreigners in Germany are waiting on tenterhooks for the introduction of the new dual nationality law on Thursday - but the centre-right CDU and CSU say they would overturn the reform if re-elected next year.

German conservatives vow to overturn dual citizenship if re-elected

“The CDU and CSU will reverse this unsuccessful reform,” Alexander Throm (CDU), spokesperson on domestic policy for the CDU/CSU parliamentary group, told DPA on Tuesday.

“Dual citizenship must remain the exception and be limited to countries that share our values.”

Throm also criticised the new citizenship law for reducing the amount of time foreigners need to live in the country before naturalising as Germans, describing the new residence requirements as “far too short”.

“After five or even three years, it is not yet possible to determine with certainty whether integration has been successful in the long term,” he stated.

“The recent caliphate demonstrations and the rampant Islamist extremism, often by people with German passports, must be a wake-up call for us all.”

READ ALSO: Which foreign residents are likely to become German after citizenship law change?

Despite vociferous opposition, the alliance between the Christian Democrats (CDU) and their Bavarian sister party (CSU) was powerless to stop the traffic-light coalition’s citizenship reform passing in both the Bundestag and Bundesrat earlier this year. 

The reform, which permits the holding of multiple passports, lowers residence requirements and removes language hurdles for certain groups, is set to come into force on June 27th. 

But with the CDU and CSU emerging as clear winners in the recent EU parliamentary elections and regularly landing on 30 percent or above in the polls, it’s possible that the party could be on course to re-enter government next year. 

In this situation, the centre-right parties have pledged to try and undo what senior CDU politicians have described as a “dangerous” reform.

“It is not unusual for successive governments to reverse decisions made by the previous government,” Andrea Lindholz, the head of the CDU/CSU parliamentary group said in a recent response to a question

“We will maintain our position on this and will continue to strive for a corresponding change.”

READ ALSO: What are citizenship offices around Germany doing to prepare for the new law?

Whether the CDU and CSU can secure enough votes at both state and federal elections to change the law in the future remains to be seen.

The parties may also have to compromise on their plans with any future coalition partner, such as the Greens, Social Democrats (SPD) or Free Democrats (FDP), all of whom support liberal immigration laws and the holding of multiple nationalities. 

‘Citizenship devaluation law’

The CDU and CSU parties, which form a centre-right alliance nicknamed the Union, have long been opposed to dual nationality in Germany.

During their years of governing in a so-called grand coalition with the centre-right Social Democrats (SPD), the parties had regularly made reforms of citizenship one of their red lines, citing the danger of hostile nations influencing Germany from within. 

In a recent parliamentary speech back in January, Throm had slammed the bill as a “citizenship devaluation law” and accused the government of trying to generate a new electorate to win votes.

CDU politician Alexander Throm speaks in a debate in the German Bundestag

CDU politician Alexander Throm speaks in a debate in the German Bundestag. Photo: picture alliance/dpa | Christoph Soeder

In comments aimed primarily at Germany’s large Turkish diaspora, the CDU politician claimed that people who had lived in Germany for decades but not taken German citizenship had already chosen their old country over Germany.

The majority of Turks in Germany are also supporters of the authoritarian president Recep Erdogan, he argued.

Responding to the claims, FDP migration expert Ann-Veruschka Jurisch said the opposition was fuelling resentments against migrants by claiming the government was “squandering German citizenship”.

In fact, she argued, the reform has tightened up requirements by ensuring that people who claim benefits and cannot support themselves are unable to become German citizens.

READ ALSO: What you need to know about Germany’s citizenship law reform

In addition, the B1 language requirements have only been softened in a few exceptional cases, for example to honour the lifetime achievements of the guest worker generation who had few opportunities when they arrived, Jurisch said. 

If foreigners have committed crimes, the authorities will be able to investigate whether these involved racist or anti-Semitic motives before citizenship is granted, she added. 

With reporting by DPA

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