This makes our Eskom trials and tribulations look insignificant:
With deep circles under their eyes, the leaders of Germany’s coalition government emerged on the morning of Sunday September 4th looking as if they had partied all night. In fact, they had just spent 22 hours negotiating an agreement on an energy-bill relief package. The package will cost at least €65bn ($64.7bn), equivalent to 1.8% of the country’s gdp. It is supposed to preserve social peace during a winter that will clobber Germans with sky-high prices for natural gas and everything else. “You’ll never walk alone,” promised Olaf Scholz, the German chancellor, who has become fond of quoting the song by Gerry & The Pacemakers in recent months.
In addition to Germany, Sweden and the Czech Republic unveiled new measures this week to help citizens and businesses cope with soaring energy prices. Europe’s bills have been rising ever since February, when the eu imposed sanctions on Russia over its invasion of Ukraine and Russia responded by throttling supplies. The latest jump came after the decision on September 2nd by the g7, a club of big Western economies, to impose a cap on the price of Russian oil. The following day Russia announced it would indefinitely continue its cut-off of gas deliveries through Nord Stream 1, its main pipeline to Germany, supposedly for technical reasons. On the morning of September 5th the price of gas on Amsterdam’s ttf exchange leapt some 30%. It now stands at about ten times the average price in September 2021.
Russia’s weaponisation of energy supplies is testing Europe’s financial resources. Governments are struggling to balance relief for citizens and firms with the need to let energy prices rise in order to discourage overuse. They must also avoid getting into bidding wars with each other. On September 9th EU energy ministers will meet in Brussels to discuss collective measures, such as common caps on gas or electricity prices, to solve problems they cannot tackle individually. If they fail, European voters may demand their governments drop sanctions on Russia in the hope of getting cheaper energy supplies—or make way for new leaders who will.
Germany, the continent’s largest economy, has implemented the largest energy-bill-relief packages. The new one is its third and biggest. (The two previous ones together amounted to €30bn.) It includes tax breaks for energy-intensive industries, one-off payments of €200 for students and €300 for pensioners, subsidised tickets for public transport and higher monthly child benefits. An electricity-price brake will cap the price of a basic minimum amount of electricity for households and small businesses. Basic welfare provisions and child benefits will rise, as will rent subsidies for the needy.
Full article: Search | The Economist