200 billion for Germany: Olaf Scholz’s last chance?

The German State which gives 200 billion euros in the face of the crisis, is this a form of unfair competition?

German Chancellor Olaf Scholz during the press conference with NATO Secretary General Jens Stoltenberg on December 1, 2022 in Berlin. (Illustration) (MAXPPP)

European Micro today takes a look at Germany with Kai Littmann, the director of eurojournalist.eu. Germany will invest 200 billion euros in industry, and for households.

Kai Littmann: It’s definitely competition. This is a big step for Germany outside the European Union, because we still have to be realistic. There are not many countries in Europe that can afford to invest 200 billion euros for an operation, which, moreover, is limited in time, to soften the consequences of this energy shortage a little.

It must also be said that the German authorities are sending messages everywhere saying beware, beware, this is not anti-European competition. You understand, don’t take this the wrong way…

Insofar as effectively, as you said, this measure also concerns industry, SMEs, SMIs, obviously, it is competition.

And IG Metall, the metallurgy union with the employers, have taken a decision, it is to increase wages in this sector by more than 6%, that’s a lot…

There are many sectors currently where employees want to have their share of the cake. In the petrochemical industry it’s the same, wherever companies have earned much more money than normal, employees want their piece of the pie. So somehow it’s understandable. And at the same time, in a situation where everything you do is on credit, it may not be the right decision either.

Is it also necessary to say that Germany knew how to preserve and keep its industry?

Yes quite. We invested a lot of money. This current measurement is called the dopple wumms, the double wumms, it is an expression of Chancellor Olaf Scholz, a wumms is a clash, a clash of two cars that collide for example, so the double clash. The first was the wumms in 2020 with an investment of 130 billion euros to deal with the consequences of the pandemic, and now it’s the dopple wumms, so double wumms, and now it’s no longer 130 billion but 200 billion euros.

And from next January 1, the increase in energy in Germany is more than 50%.

Between 50 and 70%, there are more than 300 energy suppliers who will apply this increase, and that is where the shield is set in motion, which is extremely complicated, and which effectively favors homes for a certain time, which also favors industry, SMEs, SMIs. But don’t forget, it’s only for a while. And if, for example, the situation in Ukraine should not change during the year 2023, there will not be enough money to make a triple wumms…

We call it in French a pear for thirst….

It’s a bit like that. To tell the truth, in Germany, nobody understands how it will work. For example, the electricity shield which sits at 12 cents per kilowatt hour for households, but only for 80% of the previous year’s consumption. So to calculate the real price, for the remaining 20%, I think it will create many, many jobs in Germany, in the administration and it will become totally chaotic.

This is why today, the Germans are very worried, it must be said…

They are very worried, also because of their geographical location. We must not forget that Germany is a neighboring country of Poland, Poland which is coming more and more into the crosshairs of everything that is happening around this war in Ukraine. Indeed, there are many worries in Germany, but the biggest worry, as shown by a recent survey, is indeed the fear of no longer meeting the costs of everyday life, and therefore of falling into precariousness, which is something that certainly awaits a good part of the German population.

The Germans remember 1919, 1929, 1945, that is to say the ruin…

Yes, we know this situation. We are indeed afraid of going through that again, and that will result in social tensions.

Who says social tensions, says the rise of the nationalist AfD party…

Yes, with each survey, they grab a few points. They definitely have the wind in their sails, but it must still be emphasized that they do not make statements and do not offer anything to get out of these crises. They are silent and rise in the polls.

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