Billionaire issues warning about German economy

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Germany’s recent fiscal policy measures, combined with the country’s chronically high energy costs, are likely to exacerbate the country’s economic problems, Russian industrialist Oleg Deripaska stated on Telegram on Friday.

According to the billionaire, Berlin’s efforts to address economic issues are ineffective.

“The jump in power and petrol costs for German businesses and ordinary Germans are pushing the once-thriving major European economy to beg with its hat in hand,” he stated. He went on to say that “deficits, subsidies or the issuance of debt securities will definitely not lead to anything good.”

His remarks come in response to allegations that Berlin intends to suspend the “debt brake” mechanism, a constitutional limit on net new borrowing, for the fourth year in a row. The extraordinary action is intended to assist the government in accounting for around €37 billion ($40.3 billion) in new off-budget debt accrued as a result of measures made to alleviate the burden of high power and petrol costs on individuals and businesses. It is expected to be included in a revised budget for 2023 next week.

Last year, Germany and the rest of the EU faced an energy crisis, owing mostly to the loss of Russian gas imports as a result of Ukraine-related sanctions on Moscow. While Berlin has been able to substitute some of the gas it previously purchased from Russia with alternate sources, experts note that the heating season may still prove trying and energy prices could spike again.

High energy prices have harmed Germany’s economy, driving up inflation and prompting the government to raise interest rates, causing problems in the manufacturing sector. The country entered a technical recession in the first quarter of the year and showed little improvement in the second and third quarters.

Deripaska has previously criticised EU sanctions against Russia, comparing them to an economic “wonder-weapon” that is useless, outmoded, and may affect the countries who use it as well as the global economy as a whole.