Let energy price brakes expire? Financial expert comments on Lindner's controversial decision and what it means for consumers.

Let energy price brakes expire? Financial expert comments on Lindner's controversial decision and what it means for consumers.

According to a report by www.rnd.de,

As a consequence of the Constitutional Court ruling on the budget, Finance Minister Lindner wants to allow the electricity and gas price brakes to expire at the end of the year, which is met with resistance from the SPD. This heralds a dispute in the traffic light coalition. The positions of both sides are understandable: Lindner lacks the resources to finance the energy price caps because the construction of the economic stabilization fund was considered unconstitutional. The SPD, on the other hand, argues that the energy crisis is not yet over and that prices need to be further stabilized. Both sides have good arguments, but the market prices for electricity and gas are currently below the government price caps. However, there is a way to take both positions into account by expiring the current regulation, but providing legal assurance that a modified price cap will intervene again if the worst comes to the worst.

The energy price brakes have an important psychological effect, especially in an unstable economic situation. Nevertheless, the two positions can be linked. If a worst-case scenario occurs, suspending the debt brake again could also be justified, as the exception clause in the Basic Law is intended precisely for such unforeseeable emergencies.

The impact of this decision could be felt on the energy market. An expiry of the price cap could lead to an increase in energy prices, especially for consumers who have not actively sought cheaper tariffs. This could also have an impact on general inflation and consumer spending. On the other hand, sticking to the price cap could increase the state's financial burden and have long-term effects on the budget.

Overall, it is important to find a balanced approach that takes into account consumer needs and financial realities. The long-term impact of this decision must be carefully considered to ensure stable energy supplies and sound fiscal management.