Extension of the energy price brakes until 2024: Federal government spending could amount to 14 billion euros

Extension of the energy price brakes until 2024: Federal government spending could amount to 14 billion euros

According to a report by Tagesspiegel, the Ministry of Economic Affairs plans to extend the energy price brakes until the end of April 2024. The federal government is expected to spend around 14 billion euros. The gas and electricity price brake, which is limited until the end of December 2023, can be extended by a federal government regulation with the consent of the Bundestag, but must be approved by the EU Commission.

It is already estimated that the electricity price cap will cause around 6.4 billion euros and the gas price cap will cause around 7.7 billion euros in household expenditure. This estimate is based on the previous use of the energy price brakes and price developments on the energy markets. It is emphasized that the costs can be forecast to a limited extent as they depend heavily on price developments.

The energy price brakes are financed from the economic stabilization fund, which dates back to the times of the corona pandemic. This federal government's debt-financed special pot was activated in the energy price crisis that was triggered by Russia's war of aggression in Ukraine.

According to the Ministry of Economy's draft, the situation on the energy markets has stabilized since last winter, but there is still the possibility of unexpected risks due to the ongoing war situation in Europe. The continuation of the energy price brakes in winter 2023/2024 is therefore viewed as insurance against unexpected risks and is intended to have a stabilizing effect.

However, due to falling energy prices, it is expected that only a third of households will still be eligible for the price caps. By mid-September, the energy price brakes had already cost the federal government more than 20 billion euros.

This extension of the energy price caps could have a significant impact on the market, consumers and the industry. Billions of dollars in budget spending will put a strain on the federal budget and could make other state services more expensive. While falling energy prices will result in fewer households being eligible for the price caps, they could also lead to other companies in the industry experiencing economic difficulties as demand for their products falls.

Source: According to a report by Tagesspiegel (https://www.tagesspiegel.de/politik/versicherung-gegen-unerwartete-unternehmen-verlangerung-von-preisbremsen-kostet-14-milliarden-euro-10673392.html)