Germany: Until March 2024 on gas, not 19 but 7 percent tax
you never walk alone, German Chancellor Olaf Scholz echoed a band from Liverpool in late July, trying to reassure the German people. His government had just bought a 30 percent stake in the nation’s largest gas importer Uniper and put 7.7 billion euros into the company.
As in the Netherlands, German inflation is hitting 10 percent and Scholz’s government is mainly focusing on curbing gas and energy prices. Until March 2024, for example, Germans will not pay 19 but 7 percent tax on gas.
On the other hand, Germans will soon pay an energy surcharge to energy suppliers, with the aim of giving the suppliers more resources to look for new energy sources. Scholz expects the allowance to cost a household of four people between 200 and 300 euros annually.
Some German economists are critical of the German plans. For example, according to Stefan Kooths of the leading Institute for the World Economy in Kiel, the measures are too generic and it makes more sense to compensate the groups that are hardest hit. There has been similar criticism of Finance Minister Christian Lindner’s plan to cut taxes in order to boost German purchasing power. That too would offer too little solace to low incomes.
Dylan van Bekkum
Spain: Social assistance and social pensions increased by 15 percent
The Spanish government has imposed a maximum rent increase of 2 percent per year, and increased social assistance and social pensions by 15 percent. Spaniards also get a 20 cent discount on every liter of petrol, paid for by the government and the gas station.
Of all major European economies, Spanish purchasing power is falling the fastest, with no less than 10.7 percent in July. Vacationers this summer will have noticed that hotels and flights are up to 30 percent more expensive.
Spanish households are particularly concerned about energy prices. Just like in Portugal, these are 49 percent higher than last year. Spain is also taking rigorous measures in this area. Together with Portugal, it negotiated an exception with the European Commission from the European free trade rules, which means that it can freeze energy prices for a year. A megawatt hour of electricity will cost on average no more than 50 euros next year.
Energy prices in Spain were already rising long before the war in Ukraine. Without all these measures, the situation would have been much more disastrous, according to the Spanish statistics agency INE. An additional problem is that Spanish wages have only increased by 2.56 percent and are therefore far behind the price increases.
Dylan van Bekkum
France: The price of main foodstuffs frozen
French President Emmanuel Macron had a heavy message for the French on his first working day after the summer recess. “The times of abundance, carelessness and self-evidence are over,” Macron said yesterday. He previously called the decline in French purchasing power ‘the price of freedom’. The president wants collective energy consumption to fall by ten percent within two years, including by asking everyone to turn off unnecessary lighting at night.
Meanwhile, his government has imposed an energy price cap after buying the country’s largest (and Europe’s second-largest) energy supplier, EDF. The price for electricity will increase by a maximum of 4 percent per year. The tax on electricity has also been minimized, from 22.50 euros per megawatt hour to 1 euro for households and 50 cents for companies. At the pump, the French government grants up to 30 cents per liter of petrol.
The French business community is also doing its bit. For example, Carrefour, the largest supermarket in the country, will freeze the prices of the 100 most important foodstuffs for three months.
Now Macron must decide which measures to include in the 2023 budget. He was already preparing the French for bad news. “I’m not just going to say what people want to hear.
Dylan van Bekkum
Sweden: Distribution of grid operator revenues among consumers
“We will not let Russian President Putin take Swedish households hostage,” Swedish Prime Minister Magdalena Andersson said last week, when she announced she would compensate consumers and businesses for the high energy prices.
The Andersson government wants to force grid operator Svenska kraftnät to return part of its revenues to consumers and businesses. It is about three billion euros. Legislation is still required.
The money should mainly go to residents in the south. Prices there are five times higher than in other parts of the country. “People get nauseous when they think about next winter’s prices,” Andersson said. In the northern region, the supply of electricity is much greater than the demand, so the tariff is low. The boundaries of the regions are where there is a kink in the network due to natural or technical obstacles.
It is not clear how the network operator will distribute the money. It can lower rates or give money back. The administrator has until November 15 to make plans. In the meantime, there are elections in Sweden, after which everything could be different. The largest opposition party wants to set aside 15 billion euros for compensation.
Jeroen Visser
Belgium: Higher energy bill ends up with employers
While it was 30 degrees outside, Belgians searched the internet remarkably often this summer for terms such as ‘wood stove’ or ‘firewood’. Like the Dutch, they worry about their energy bills and are looking for ways to get through the winter warm and affordable.
That is not going to be easy at current prices. In addition, Prime Minister De Croo made it clear this week that it will not stop at one tough season: “It will be difficult in the next five to ten winters,” he said. In March, it was already decided to keep the two nuclear power plants that would close in 2025 open for at least ten years longer.
Part of the higher energy bill in Belgium ends up with employers. They are obliged to compensate part of the increased prices in wages (the so-called automatic wage indexation). It’s a measure that has been frustrating businesses for years because it hurts its competitive position, and that complaint is only getting louder in this time of high taxes and staff shortages.
In addition, the government has lowered the VAT on gas and electricity, given everyone a ‘cheque’ for 100 euros and expanded the ‘social rate’: a favorable rate for electricity, natural gas or geothermal heat for certain families.
Sacha Kester