German Chancellor Olaf Scholz and his cabinet have led Germany into a “serious national crisis,” Bavaria’s Prime Minister Markus Soeder warned media on Saturday. Berlin will struggle to find a way out of this mess, the politician warned, adding that the government’s “budget emergency” will almost certainly become another burden for regular Germans.
His remarks came as the federal government declared that energy price limits would be lifted by the end of the year. Electricity and gas price caps were implemented in 2022 to protect people and businesses from increasing gas and electricity prices as Germany, along with many other EU states, actively reduced energy imports from Russia. In reaction to the outbreak, the measure was implemented.
The brakes were supposed to be in place until at least March 2024, but Berlin had to revise its plans after the German Constitutional Court banned a transfer of €60 billion ($66 billion) from the Covid-19 pandemic fund to other projects.
According to Soeder, the financing shortfall and resulting fiscal problem are “nothing but this government’s emergency.” Scholz and his cabinet have “completely… mindless” policies, according to the politician, who also leads Bavaria’s largest party, the Christian Social Union (CSU). “This government has gone bankrupt,” he went on to say.
“Basically, we have a government that is just reeling,” he told journalists on the sidelines of his party’s meeting in Nuremberg ahead of the EU parliament elections. Soeder also branded the declaration of the “budget emergency” by Berlin as a sign of the “complete helplessness” of the government coalition.
The head of Bavaria in particular criticized the federal government’s strategy of combating energy price hikes resulting from forgoing Russian energy supplies with mere subsidies. “The idea of just subsidizing electricity prices doesn’t work. A different energy policy is needed. That is the core of the problem,” he said, demanding that Berlin reverse its nuclear power plants’ phaseout in particular.
He warned that eliminating the energy price brakes would cause a significant amount of uncertainty in the economy and raise electricity rates for both residents and businesses.
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. Berlin was able to substitute some of the gas it had previously purchased from Russia, but high energy costs harmed Germany’s economy and increased inflation. Germany entered a technical recession in the first quarter of 2023, with minimal improvement in the following two quarters.
