Germany’s Parliament approves a €200bn package to tackle the energy crisis

Germany’s Parliament, the Bundestag, has approved the German Government’s €200bn rescue package that aims to protect companies and households from the impact of soaring energy prices. The fund is set to last until 2024 and will finance various energy price caps and subsidies. Private households could benefit from a price cap of 80% of their usual consumption starting in March 2023, and the price cap for companies could come into effect as soon as January 2023. The package also included a cut of gas and district heating sales tax from 19% to 7%.

Simultaneously, the Bundestag also voted to suspend Germany’s constitutional debt brake in order to facilitate the financing of the rescue package’s The debt brake usually limits the federal government's structural net borrowing to 0.35% of the country’s GDP but can be lifted in the event of natural disasters or exceptional emergencies beyond the control of the state and significantly affecting the state's financial position.

This €200bn package is expected to include a €96bn subsidy scheme which was introduced earlier in October 2022. In the scheme, from March 2023 to the end of April 2024, private households would pay €12c/kWh for the first 80% of the previous year’s use of gas. From 1 January 2023 until the end of April 2024, industrial tariff for 70% of the prior year's use would be set at €7/kWh.