After budget ruling: Habeck fears for energy price brake

After budget ruling: Habeck fears for energy price brake

Economics Minister Robert Habeck fears that the Karlsruhe budget ruling will have an even greater impact on federal finances - and also on energy prices.

In his opinion, the ruling also jeopardizes the Economic Stabilization Fund (WSF), from which the energy price brakes are paid, said the Green politician on Deutschlandfunk radio. "In its reasoning, the ruling, because it is so fundamental, basically refers to all funds that have been set up and are perennial."

This would also affect funds that have already been paid out this year. This is because 31.2 billion euros had already been disbursed from the WSF by the end of October. Specifically: 11.1 billion euros for the gas price brake and 11.6 billion euros for the electricity price brake, plus 4.8 billion euros for emergency aid for natural gas and 3.7 billion euros in subsidies for network charges.

The energy price brakes were intended to mitigate the rapid rise in gas and electricity prices following the Russian attack on Ukraine. Aid was also provided for particularly affected companies. To this end, the special fund, which is economically independent of the core budget, was fed with loans amounting to 200 billion euros. Whether the funds will still be available next year is just as unclear as the question of whether the money should have been paid this year at all.

Higher electricity and possibly higher gas prices

"In plain language, however, this means that at least for the future - the (fund) is set to last until summer 2024 - citizens will face higher electricity prices and possibly higher gas prices," said Habeck. "If we get into a crisis, we will no longer be able to apply the gas and electricity price brakes. Then we will have higher gas and electricity prices and district heating prices."

A hearing of experts on Tuesday should provide more clarity. Both the government and CDU/CSU parliamentary group leader Friedrich Merz have announced that they will also have the economic stabilization fund examined for constitutionality. The CDU/CSU intends to go to court again if necessary. Habeck emphasized that citizens could address letters of thanks for potentially higher electricity prices to the CDU/CSU.

Union rejects Habeck's accusations

The opposition CDU/CSU had filed a lawsuit in Karlsruhe against the reallocation of 60 billion euros in loans in the federal budget. They had been approved to deal with the coronavirus crisis, but were then to be used for climate protection and modernizing the economy. The Constitutional Court declared the traffic light government's maneuver null and void: the money is now no longer available. The ruling could also have consequences for the handling of debt-financed special funds at federal and state level in general.

The CDU/CSU rejected Habeck's accusations. "Only the failure of the traffic light government has led Germany into this situation, which was a breach of the constitution by design," said Jens Spahn, deputy leader of the parliamentary group. "This government does not have its finances under control, it has been throwing money around for two years as if there was no tomorrow." It is now up to the government to set priorities.

The FDP brought cuts in social spending into play in order to plug the billion-euro hole. FDP parliamentary group leader Christian Dürr told the Funke media group that the traffic light coalition needed to discuss where the welfare state could make its contribution to budget consolidation. Tax increases, on the other hand, were the wrong way to stimulate the economy and make Germany competitive again as a business location. Expenditure on pension insurance and basic security are among the largest in the federal budget. The budget of the Federal Ministry of Labor and Social Affairs amounts to more than 165 billion euros - more than a third of the total budget.

SPD parliamentary group deputy Sören Rix rejected the FDP proposal. "If the FDP now brings cuts in social benefits into play, it is not only playing with the cohesion in the coalition, but also massively endangering democratic cohesion in our country."

1. Robert Habeck believes that the Karlsruhe budget ruling could threaten the availability of funds used for the Energy price brakes, such as the Gas price brake and Electricity price brake.
2. The ruling, in Habeck's opinion, could potentially affect funds like the Economic Stabilization Fund (WSF), which has disbursed more than 31 billion euros for energy price brakes and other aid this year.
3. The fears of Habeck and others are based on the fact that the ruling seems to question the constitutionality of all permanent funds, including those used for energy price brakes.
4. As a result of these potential changes, consumers may face higher electricity and gas prices in the future, as the funds for price brakes may not be available or may not be usable.
5. During a hearing of experts, Robert Habeck's Green party, the CDU/CSU, and the FDP will all examine the constitutionality of the Economic Stabilization Fund and discuss potential ways to address higher energy prices and budget issues.

Source: www.dpa.com