(Bloomberg) -- Germany’s energy crisis is “definitely not finished,” with high natural gas prices still putting a strain on the country’s economy, Chancellor Olaf Scholz told lawmakers.
Germany was among the countries hardest hit when Russia curbed shipments of pipeline gas to Europe last year, driving up energy costs and forcing Berlin to hand out billions of euros to ease the burden of soaring power and gas bills. The country is the only Group of Seven nation whose economy the IMF expects to contract this year.
But while prices still are above pre-crisis levels, they are mostly below the upper price caps set by the government and will allow the phaseout of energy subsidies next year, Scholz said in a speech to the country’s Parliament Tuesday.
Meanwhile, gas storage facilities are so full that the nation doesn’t expect any sudden price jumps this winter, he said. “However, should energy prices unexpectedly rise dramatically again, we are always in a position to take countermeasures at short notice.”
Scholz’ government is facing a budget crisis after a landmark ruling of the country’s top court meant that tens of billions of euros of debt in special funds — including those used to reduce energy bills for households and businesses — would have to be accounted for in the regular federal budget. His coalition on Monday approved a supplementary 2023 budget that includes the suspension of rules limiting net new borrowing for a fourth consecutive year.
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