Germany launches a 65 billion euro plan to face the winter

Two days after the perhaps definitive stop to the flow of gas from Russia, Germany takes action with a 65 billion plan for businesses and citizens.

• Germany has launched a 65 billion euro package of measures to counter energy increases.
• On Friday, Gazprom announced that the Nord Stream 1 pipeline would not resume operation.
• The Kremlin confirms:no gas flow as long as there are sanctions against Moscow.

There Germany runs for cover, in anticipation of a winter characterized by uncertainty - how much gas will Europe have available?– and one certainty:skyrocketing inflation (in August in Berlin it increased by 7.9 percent and according to German economists it will soon reach double figures).The German government chaired by Olaf Scholz he therefore launched one series of measurements from total value of 65 billion euros, which include aid for citizens and businesses, to deal with the possible (as well as probable) emergency of the coming months.

This is the third intervention implemented by the executive composed of ssocial democrats, greens and liberals, for a total of almost 100 billion euros allocated.“Our third aid package – explained Chancellor Olaf Scholz – is greater than the first two combined.It is particularly important to me that it supports those who have a low income and who, without support, fear for their livelihood."

The money comes from the extra profits of energy companies

The new aid package will not make it necessary to resort to extra debt:the 65 billion euros will be raised partly from the current budget, partly from a levy on extra profits made by energy companies thanks to the surge in market prices, funds that will be used to help lower the cost of bills for families and businesses.These are the main measures:

• a cap will be placed on the price of electricity on the bill;
• the increase in the price of CO2 scheduled for the beginning of 2023, of 5 euros per ton, will be postponed by one year;
• pensioners will receive a bonus lump sum from 300 euros students from 200 euros;
• family allowances for the first two children will increase by 18 euros, for a total of 432 euros more, for two years.
• the number of beneficiaries of the will be expanded to two million citizens from 2023 housing subsidy, which will also contain a permanent climate component and a permanent heating cost component;
• from September to December 2022, for current beneficiaries of the housing subsidy, a second heating contribution will be provided lump sum:415 euros for one person, 540 euros for two people and a further 100 euros for each additional person.

The measure introduced last summer of the 9 euro season ticket for trains has also been confirmed, but remodulated:new tickets will cost from 49 to 69 euros.A measure, the latter, which only partially satisfies the Vdv, association of German transport companies, which warns:“It's good that there are finally concrete numbers on the table, but what about the increase in energy costs?The VDV calls for a timely political solution, otherwise in the face of a lower ticket there will be an increasingly limited offer because transport companies have to save costs".

With these measures, Scholz assured, "Germany is ready to face the winter":a confidence also placed in the fact that as far as Berlin is concerned, gas storage has now reached 85 percent of capacity, a figure very close to the target of 90 percent set for the beginning of October.

At what point is Italy?

Italy is also at a good point (86 percent of capacity) regarding storage, while a new aid decree, which would be the third in our case too, is still under discussion:Italian politics is currently divided on the use of a budget deviation, or the use of an increase in debt (a hypothesis not wanted by the resigning Prime Minister Mario Draghi, but pushed by part of the majority) and is thinking about a reformulation of the law , already in force, on extra profits.

The contribution to date, foreseen by Ukrainian decree for 2022 as an extraordinary solidarity levy, it is already foreseen in the amount of 25 percent of the increase in the balance between active and passive operations, but few companies have paid, and indeed have appealed to court deeming the measure unconstitutional:by June, the state had cashed in just one billion compared to the 4.2 expected.The Lazio Regional Administrative Court will issue the ruling on the appeals - much awaited at this point - only on November 8th.

The (definitive?) closure of Nord Stream I 

The package of measures developed by Germany arrives just 48 hours after Russia's closure of the important Nord Stream 1 gas pipeline, the main gas conductor to Europe, which reached Germany directly through the Baltic countries:in fact, on the evening of Friday 2 September the Russian energy giant Gazprom declared in a note that it was not able, at the moment, to restore the supply of natural gas, which had been officially interrupted a few days earlier for maintenance work.

The Russian company had given the reasons for the stop the need for urgent maintenance work to repair some key components, in an announcement made a few hours before deliveries were due to restart:In fact, Gazprom had closed the Nord Stream 1 oil pipeline on Wednesday for three days of maintenance, during which, however, further "malfunctions" of a turbine were identified.

However, the failure to restore the flow immediately seemed to be a retaliation for the hypothesis put forward at European level to set a ceiling on the price of gas and oil:today the Kremlin spokesman Dmitry Peskov in fact, he confirmed, quoted by Interfax, that the flow of gas will not resume as long as European sanctions on Russia persist.The first result, for now, is that the price of gas has skyrocketed to 264 euros per megawatt hour, with an increase of 23 percent in a single day.