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German parliament approves €200-billion energy relief plan

October 21, 2022

German lawmakers have voted to suspend a constitutional debt brake to back the relief package amid an energy crisis.

 €200 bills pictured on top of a heater
Private households could see a price cap of 80% of their usual consumption starting in MarchImage: Christian Ohde/CHROMORANGE/picture alliance

Germany's parliament, the Bundestag, on Friday backed the government's proposal of a €200 billion ($195 billion) fund to tackle skyrocketing energy prices. 

The rescue package aims to help ease the energy crisis for industries and households. 

According to the government, the fund is set to last until 2024 and will finance energy price caps and subsidies. 

Private households could benefit from a price cap of 80% of their usual consumption starting in March.

The price cap for big companies could come into effect as soon as January.

Who can afford the soaring gas prices?

Suspending the constitutional debt brake

Because financing the gas price cap had been a major challenge for the government, German lawmakers voted to suspend the constitutional debt brake before approving the energy relief fund.

The brake limits the federal government's structural net borrowing to 0.35% of gross domestic product. It was first adopted in 2009 after the financial crash. 

Under Germany's Basic Law, it can be suspended "in the event of natural disasters or exceptional emergencies beyond the control of the state and significantly affecting the state's financial position."

The Bundestag has repeatedly suspended the enshrined law since the beginning of the coronavirus pandemic to allow the country to get large loans.

fb/ar (AFP, dpa, Reuters)

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