Germany has announced a Euro 65 billion package to ease the threat of increasing energy costs, as Europe faces challenges with scarce supplies due to Russia’s invasion of Ukraine.
The package, much larger than two previous ones, covers one-off payments to the most unprotected and tax breaks to energy-intensive businesses.
Energy prices have soared since the invasion started in February this year, and Europe is trying to keep itself off Russian energy.
Ukraine has requested Europe to stand firm.
Ukraine President Volodymyr Zelensky said Russia was destroying the normal life of every European person. On Saturday night, he said Russia was preparing a “decisive energy attack on all Europeans”, and unity among European countries was the only way that would offer protection.
On Sunday, his wife Olena said that if Ukraine got strong support, the crisis would be shorter. She reminded Britons that while increasing living costs were tough, Ukraine people were paying with their lives.
European Union officials have warned that there could be a crunch point in the coming months when countries would start to experience acute economic pain while also still being asked to support the Ukrainian military and other humanitarian efforts.
Already small signs of discontent have been started, with protesters taking to the streets of the Czech capital Prague on Sunday, rallying against the soaring energy prices and calling for an end to all sanctions against Russia. Police said about 70,000 people, mainly from far-right and far-left groups, were present in the rally.
Meanwhile, several hundred protesters came together at Lubmin in north-eastern Germany, the other end of the Nord Stream gas pipeline from Russia.
They were calling for the commissioning of Nord Stream 2, a new gas pipeline which was about to get active but was suspended by the German government after the invasion.
Two days ago, Russia said it was stopping gas exports to Germany through the already active Nord Stream 1 pipeline indefinitely.
The stand-off with Russia has forced countries like Germany to find supplies from alternate sources, and its stores have risen from less than half full in June to 84% full presently.
German Chancellor Olaf Scholz said reporters that Germany would get through the winter, adding that the invader was “no longer a reliable energy partner”.
He said the government would make one-off payments to people on benefits, students, and pensioners. Caps on energy bills are also possible.
Some 9,000 energy-intensive businesses would get tax breaks to the tune of Euro 1.7 billion.
A windfall tax on energy company profits would also be considered to mitigate bills, Mr Scholz said.
The latest package brings the total spent on energy crisis relief to almost Euro 100 billion, which compares to about Euro 300 billion spent on interventions for keeping the German economy afloat during the Covid-19 crisis.
Countries across Europe are expected to adopt similar measures.
On Tuesday, UK Tory leadership hopeful Liz Truss said that she will announce a plan to manage the energy costs within a week if she becomes the prime minister.
EU energy ministers will meet on September 9 to discuss how to ease the soaring energy prices burden across the bloc.