Major sectors of the German economy could “permanently” collapse thanks to the gas and inflation crises pummeling the country, German Trade Union Confederation chairwoman Yasmin Fahimi has warned.
“We have a real emergency. Entire branches of industry are in danger of collapsing permanently because of the gas bottlenecks: aluminum, glass, the chemical industry,” Fahimi said in an interview with Bild.
“Such a collapse would have massive consequences for the entire economy and jobs in Germany,” the trade union leader warned.
Fahimi, who met with Chancellor Olaf Scholz on Monday to discuss the crisis, told Bild that a third relief package from the government was essential, particularly for the unemployed, pensioners, and students.
“It’s terrible that people have to think about which vegetables they can still afford because of their electricity and gas bills. We urgently need an energy price cap for private households,” she said.
The official recommended additional energy subsidies for households for a certain amount of kilowatt hours to help them cope with the crisis. Fahimi also recommended a one-off property tax on the mega-rich to prevent a repeat of the COVID crisis, in which German households became poorer while the wealthy added nearly 100 billion euros to their holdings.
In his meeting with Fahimi, Scholz called for “concerted action” to make it through the energy and inflation crunch. “We will only get through this crisis, as a country, when we agree together on solutions,” he said.
Berlin has already implemented two social relief packages, including the abolition of a renewable energy tax on electricity bills, a commuter allowance that can be claimed in tax returns, and a slight rise in the tax-free allowance, as well as cash payments to lower income families and the unemployed.
Germany, which purchased about 40 percent of its gas and a quarter of its oil from Russia before the escalation of the crisis in Ukraine, has been hit particularly hard among the major European economies in the wake of Brussels’ push to “phase out” the EU’s dependence on Russian energy, lacking France’s nuclear power capabilities, and Italy’s access to cheap North African sources of gas, for example.
On Monday, the German Federal Network Agency announced that the country had enough gas in its underground storage reserves to last just one to two months if supplies from Russia were to be completely cut off. Last month, Berlin activated the second of three stages of its emergency plan to reduce gas consumption, which consists of “warning,” “alert,” and “emergency” levels.
Ordinary Germans have already been hit hard by the energy and inflation crunch, which began late last year and was exacerbated by Western restrictions on Russian energy. A worrying survey conducted by the Institute for New Social Answers last month revealed that 16 percent of Germans are already skipping meals to try to make ends meet, with another 13 percent saying they would face a similar situation if prices continue to rise. Meanwhile, German farmers have warned that they could lose up to three million tons of harvest due to the EU’s Ukraine-related sanctions on Russian and Belarusian fertilizers, while industry leaders have expressed fears that a cutoff of Russian gas would spark Germany’s worst economic crisis since the Second World War.
EU officials have reacted nonchalantly to the pain being felt by Europeans, with European Commission President Ursula von der Leyen recommending that people simply turn down the thermostat a couple degrees, while EU foreign affairs chief Josep Borrell has suggested that the energy crisis is the price that Brussels must pay to obtain “freedom” from dependence on Russia.