The coalition partners must respond to a number of complicated questions. What are consumers doing who can hardly afford their daily lives because of inflation? Who is going to help the companies that are also barely able to manage the rising energy costs? How big is the risk of protests when unpayable bills soon end up in tens of thousands of mailboxes?
Coal phase-out, climate change, sector coupling: The briefing for the energy and climate sector. For decision makers
The traffic light coalition found answers to many questions over the weekend, but it seems as if the search for answers also included the practical party question of how this would affect the upcoming elections in Lower Saxony. Because on closer inspection it looks as if at least one question has been forgotten: the one about the companies.
At the closed conference in Meseberg, Federal Minister of Economics Robert Habeck described in impressive words how many companies are struggling with the current situation. True to the motto “Companies don’t vote”, the proposed solutions for industry and commerce remained largely vague.
The announcement that the German toilet paper manufacturer Hakle is insolvent due to energy and material costs was the most appropriate comment on the results of the relief package on Monday. When it came to gas prices, there was no solution for either companies or consumers. More bankruptcies will follow.
The fact that employers were even encouraged to pay an inflation premium to their employees in this situation seems like sheer mockery to many. In any case, no fiscal redistribution can solve the problem that there is not enough physical gas.
A question that is even more important in the long term also remains unanswered at the moment: What will these short-term tinkerings do in the long-term? Because even if the FDP wants to keep an eye on the bigger picture with its insistence on the debt brake, other issues that are at the heart of both the liberals and the social market economy are disappearing from view.
The state quota is now more than 51 percent. A record. This means that the state spends more than half of what citizens and companies earn to fulfill its tasks. The principle that you have to earn what you want to spend becomes more and more difficult to adhere to, the more income depends on government subsidies.
It doesn’t look like this trend will be reversed in the coming years. The measures that have now been taken are likely to mean that tough social reforms will have to be implemented again in a few years’ time.
Because more and more industries will have to come to terms with state intervention in the market. If the state wants to compensate for rising energy costs in the future thanks to the electricity price cap and soon possibly also the gas price cap, this will override the healthy incentive effect of the market. If a company makes high profits with renewable energies because they are cheaper to produce than gas, the profits from this business model will in future be declared as “accidental” and skimmed off in part. This makes investments in more cost-efficient business models less attractive.
And should such market illogics be dismantled at some point, numerous companies that could only survive because of such payments are in danger of going bankrupt. Similar to how many companies could only survive because of cheap money from the ECB. Or others because of cheap gas from Russia.
The most important thing is that the market adjusts to life without cheap gas as quickly as possible. Not only the Russian war of aggression, but also climate change make this necessary. The state must help here, without letting the help become a habit. In view of the many concrete questions from everyday life, such debates seem abstract. But exactly in between lies the tightrope act that the federal government has to master.